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U.S. Inflation Hits More Than 2-Year High: ETFs & Stocks to Win

Sanghamitra Saha
·4-min read

Annual consumer price inflation rate in the United States rose to 2.6% in March 2021 from 1.7% in the previous month and  above market forecasts of 2.5%. This marked the highest rate since August 2018. Moreover, the one-month increase in March marked the largest gains since a 0.6% increase in August 2012.

The core inflation rate, which excludes items like food and energy, was 1.6%, after a 1.3% advance in the previous month and surpassing market expectations of a 1.5% gain.

Below we highlight a few areas and their related ETFs that may gain from this inflation report.

Energy

The energy sector saw a price gain of 13.2% in March. Gasoline logged a 22.5% price gains. The gasoline index rose 9.1% sequentially in March and made up about half of the seasonally adjusted increase in the all-items index. The natural gas index also contributed to 5.0%-increase in the energy index over the month. This calls for a look at this energy ETF.

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United States Gasoline Fund (UGA) – The United States Gasoline ETF seeks to track in percentage terms the movements of gasoline prices.

Chevron Corporation CVX – The Zacks Rank #1 (Strong Buy) Chevron Corporation is one of the largest publicly traded oil and gas companies in the world. The company should benefit from higher gasoline price as it has a considerable number of gas stations in the United States.

Consumer Staples

Food inflation was 3.5% in March, helped by continued rise in costs of food away from home (up 3.7% year over year in March).Food-at-home inflation was 3.3%. All six key grocery store food group indexes increased over the period.

Consumer Staples Select Sector SPDR Fund XLP – The underlying Consumer Staples Select Sector Index seeks to provide an effective representation of the consumer staples sector of the S&P 500 Index. With XLP investing 24.63% in household products, 24.6% in beverages, 19.95% in food and staples retailing and 17.99% in food products, rising food inflation should help the fund.

Jack In The Box Inc. (JACK) – The Zacks Rank #1 restaurant company operates and franchises through Jack in the Box quick-service restaurants, and is one of the nation’s largest hamburger chains.

Auto

Price of new vehicles rose 1.5% in March, while used cars and trucks registered 9.4% price gains in the month (read: Auto Sales Jump in Q1: ETF & Stocks to Ride On).

First Trust NASDAQ Global Auto ETF CARZ – The underlying NASDAQ OMX Global Auto Index is designed to track the performance of the largest and most liquid companies engaged in manufacturing of automobiles.

Hertz Global Holdings Inc (HTZ) – The Zacks Rank #3 company operates a car rental business.

Medical Care Services

Medical care services logged 2.7% price gains in March.

iShares U.S. Healthcare Providers ETF IHF – The underlying Dow Jones U.S. Select HealthCare Providers Index of the fund measures the performance of health care providers’ sub-sector of the U.S. equity market. It includes health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes plus rehabilitation & retirement centers.

Tenet Healthcare Corporation THC – This is an investor-owned health care services company, which owns and operates general hospitals and related health care facilities for urban and rural communities in numerous states. The stock has a Zacks Rank #1.

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Jack In The Box Inc. (JACK) : Free Stock Analysis Report
 
Hertz Global Holdings, Inc (HTZ) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
 
iShares U.S. Healthcare Providers ETF (IHF): ETF Research Reports
 
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Zacks Investment Research
 
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