Investment method to overcome inflation… Food and distribution stocks are safe, REITs and dividend stocks are also preferred
The cost of living, such as the price of food, alcohol, and oil, is skyrocketing. To make matters worse, the growth outlook is declining, raising concerns about inflation and low growth. Beyond slowflation, which means high inflation amid low growth, ‘stagflation’ that leads to economic recession is also mentioned.
In a time close to such a complex crisis, what should I do to protect my assets and be called? In stock investing, you need to look for companies that do not have an effect on inflation or that can help again. For example, domestic food and distribution companies that are less affected by raw material price hikes due to their high price transfer power (the degree to which cost increases are reflected), and overseas IT companies with high pricing power, rather, inflation acts as an opportunity. This is why investment experts recommend domestic food, feed and distribution stocks and overseas IT stocks. If ‘Donghak Ant’ focuses on the Korean stock market, it is worth paying attention to food and distribution stocks. Food and distribution stocks are representative industries that can maintain earnings despite rising raw material prices due to their high price pass-through power. In addition, it is expected to benefit from the recent ‘re-opening’ due to social distancing.
If you are a ‘Seohak Ant’ who is more interested in US stocks than domestic stocks, companies with high brand power are worth paying attention to. Firms with high pricing power reduce consumer demand by increasing prices. Therefore, a company can defend its margins despite the cost burden. This is evident in past cases. At the time of the ‘second oil shock’, which had a shock to the global economy due to rapid inflation, stock prices of companies such as Intel (71%), Hewlett-Packard (45%), and Pfizer (19%) soared. All three companies were companies with pricing power as brand companies representing IT and biotechnology.
REITs and dividend stocks are recommended by experts in a time of high stock price volatility. REITs, which use real estate as an underlying asset, are considered a representative inflation hedge asset. A stable dividend payout is attractive. Another strength of REITs is the ability to pass on the price. In the domestic commercial real estate market, it is easy to pass on the same amount of inflation to rent. It is also a good thing that new real estate construction is experiencing difficulties due to higher development costs due to the rise in raw materials.
It is expected that the value of existing assets held by REITs will increase. In fact, recently, as investors’ interest in the domestic stock market has gathered, a lot of new stock prices have been reported in REITs. The hottest event is ‘Re-Opening REITs’. It refers to REITs that use hotels, resorts, and department stores as their underlying assets. Representative products include Shinhan Seobu TND REITs with hotels and shopping malls, and Lotte REITs with marts and department stores.
Dividend stocks are also drawing attention as the stock market is locked in box prices due to inflation concerns. According to FnGuide, the listed company with the highest dividend yield based on the closing price of April 18 was 14.9%, Incredible in the KOSDAQ market. It was followed by Hyosung TNC (11.89%) and HD Hyundai (9.52%).
Financial stocks, a typical beneficiary of interest rate hikes and high dividend payouts, also made the top spot. NH Investment & Securities (9.52%), Samsung Securities (9.38%), and Tongyang Life Insurance (9.01%).
It goes without saying, but you need to be careful with stocks that are rising rapidly. raw materials are like that. It is difficult to invest in the belief that ‘raw materials will rise’ blindly just because the uptrend is steep. This is because there are many variables that can affect the price, including the Russian-Ukraine war. Feed stock is a stock that has benefited greatly from ‘Putinflation’. The price of grain has soared as Russia and Ukraine, the world’s major grain producers, are at war. However, the problem is that it is too high. In the case of Hyundai Feed, the stock price rose 30% in six months from January to July last year, but the performance took a step backward.
[글 명순영 기자 사진 픽사베이]
[ⓒ 매일경제 & mk.co.kr, 무단전재 및 재배포 금지]