High inflation is a major bugbear for the global economy as countries grapple with the rising cost of goods and services.
Consumer demand and spending will be hit as more people tighten their belts.
Companies will also incur higher expenses as the selling, marketing and administrative costs rise.
In such an environment, it makes sense for you to look for stocks that have strong pricing power.
These businesses can raise the prices of their goods and services without suffering a corresponding fall in sales volume.
To do so, the company needs to have a strong brand and a dominant market position within its industry.
Here are four US stocks with the above characteristics that can do wonders for your investment portfolio.
Tractor Supply Company (NASDAQ: TSCO)
Tractor Supply Company is the largest rural lifestyle retailer in the US.
The company sells an extensive range of products such as lawnmowers, tools and pet supplies and operates 2,016 Tractor Supply stores in 49 states.
Tractor Supply has enjoyed steady growth in its top and bottom lines in the last two years.
Sales increased from US$8.4 billion in fiscal 2019 (FY2019) to US$12.7 billion.
Net profit jumped by 77.3% from US$562.4 million to US$997.1 million over the same period.
Annual dividends per share also surged from US$1.36 to US$2.08 from FY2019 to FY2021.
Tractor Supply looks to continue this trend in the first half of fiscal 2022 (1H2022), with sales rising 8.3% year on year to US$6.9 billion and net profit improving by 5.9% year on year to US$583.7 million.
The company opened 13 new Tractor Supply stores in 1H2022 and saw membership for its loyalty program Neighbor’s Club rise 24% year on year to 26 million members.
Starbucks (NASDAQ: SBUX)
Starbucks is a global coffee chain with around 34,000 outlets around the world.
The company has done well from 2019 to 2021 despite suffering a setback from temporary store closures in 2020.
Revenue rose from US$26.5 billion in FY2019 (ended 30 September 2019) to US$29.1 billion in FY2021.
Net profit rose from US$3.6 billion to US$4.2 billion over the same period.
For the first nine months of fiscal 2022 (9M2022), revenue climbed 14% year on year to US$23.8 billion but net profit dipped by 1.3% year on year to US$2.4 billion due to higher expenses.
Positive changes are afoot at the coffee specialist.
New CEO Laxman Narasimhan will take over from founder Howard Shultz on 1 April 2023 and Starbucks also hosted its biennial Investor Day where it projected mid-teens earnings growth per year till 2025.
Apple (NASDAQ: AAPL)
Apple needs no introduction, being the inventor and manufacturer of the iconic iPhone.
The strength of the company’s brand and its innovative lineup of products and services has helped it to grow its revenue and net profit through the pandemic.
Sales rose from US$260.2 billion in FY2019 ending 30 September 2019 to US$365.8 billion in FY2021.
Net profit jumped 71.3% over the same period from US$55.3 billion to US$94.7 billion.
For the first nine months of fiscal 2022 (9M2022), Apple continued to impress by growing sales by 7.7% year on year to US$304.2 billion.
Net profit edged up 6.7% year on year to US$79.1 billion.
The company had just released iPhone 14 and iPhone 14 Plus which feature a new dual camera system and an emergency SOS service via satellite.
Chipotle Mexican Grill (NYSE: CMG)
Chipotle Mexican Grill owns a chain of restaurants serving Mexican food cooked without artificial colours, flavours, or preservatives.
The company operates more than 3,000 restaurants in the US, Canada, the UK and parts of Europe as of 30 June 2022.
Chipotle has done well by pivoting to digital sales amid the pandemic and has managed to grow its revenue and net income over the past two years.
Revenue stood at US$5.6 billion in FY2019 but rose to US$7.5 billion by FY2021, while net profit surged from US$350.2 million to US$653 million over the same period.
The Mexican restaurant chain continued to post strong numbers for its FY2022’s second quarter (2Q2022).
Revenue increased 17% year on year to US$2.2 billion with comparable restaurant sales rising 10.1% year on year.
Digital sales made up nearly 40% of total food and beverage revenue, and earnings per share jumped 40% year on year to US$9.25.
Chipotle opened 42 new restaurants during the quarter and expects to open a total of 235 to 250 new restaurants for the year.
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Disclaimer: Royston Yang owns shares of Tractor Supply Company, Apple and Starbucks.