We dive into a discussion surrounding pricing power and how stocks with pricing power have the ability to outperform for investors during inflationary periods.

Global stock market investors have been searching for stocks to buy during inflation like we’re currently experiencing. Central banks are trying to curtail inflation and the stock market has experienced a bear market, however companies with pricing power have had resolute earnings and growing JAWS ratio.

Today on the For Investors channel we discuss companies with increasing profitability as seen through their JAWS ratio and why pricing power matters during an inflationary period as ASX investors and global stock market investors look for stocks to buy during inflationary periods such as those with pricing power.

The following timestamps have been included to guide your viewing experience:
00:00 – Welcome
00:27 – What Is Pricing Power?
01:53 – Why Pricing Power Matters?
04:23 – JAWS Ratio For Pricing Power

#PricingPower #Stocks #ASXInvestor
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These videos are produced based on information obtained from sources believed to be accurate at the time of discussion, however we cannot guarantee the accuracy or completeness of this communication. The content creator may hold securities issued by people who appear on these programs and may trade in those securities. For Investors has commercial relationships with some of its contributors…(read more)

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Inflation is a term used to describe an economic scenario in which the prices of goods and services rise at a faster pace than people’s income level or purchasing power. It is a complex phenomenon that can have significant effects on the economy, leading to changes in the stock market. As such, it is essential to identify the stocks that perform well during inflation.

The key to purchasing shares during inflation is to target a company that can maintain its profitability in a period of rising costs. Such firms are those that can optimize their pricing structures, pass on their increased costs to consumers and maintain their market position.

Utilities are the most suitable stocks for inflationary times since they are typically monopolies. They provide essential services such as energy, water, and gas regardless of the economy’s condition. As a result, their revenue is generally stable throughout the economic turmoil period.

However, it is equally essential to consider the state of interest rates when identifying stocks that perform well during inflation. Inflation leads to an increase in interest rates as governments try to cool off the economy. Companies that can actively manage their borrowing costs will perform well in such an environment.

Another sector worth considering during inflation is consumer staples, such as groceries, clothing, and healthcare. These items are non-discretionary, meaning that people cannot cut back on them, even when times are tough. The companies that produce these necessities are, therefore, likely to maintain their sales level during inflation. It is important to note that companies that depend on expensive raw materials like oil may struggle in the short-term.

Finally, hard assets such as gold, real estate, and commodities are another sector known to perform well during inflation. These items have intrinsic value and are not susceptible to currency fluctuations. In times of inflation, the value of fiat currency like the dollar or euro declines, which in turn increases the value of hard assets.

In conclusion, choosing the right stocks during inflation requires a keen awareness of the current economic situation and a deep understanding of each company’s underlying fundamentals. It is advisable to work with a financial advisor to help you identify the right stocks for your portfolio given your unique financial goals. By choosing the right mix of stocks that are resistant to inflationary pressures, you can weather economic turbulence and maintain your wealth.