A Tale of Two Stocks, That Can Beat Inflation?

A Tale of Two Stocks, That Can Beat Inflation?

I was reading an article the other day about two stocks that can beat out inflation over a long term investment. These two stocks are Apple, Inc. (AAPL) and Starbucks, Inc. (SBUX).

Okay, I’ve owned both stocks in the past, and I current own several positions of AAPL.

Simple Rule of Thumb

Simple Rulle of Thumb. You have to buy top performing stocks that hedge against inflation in order to beat inflation. This is simply because, having a CD account or a Money Market account won’t beat inflation if these accounts only yield 1 to 2%.

I agree on AAPL but not so much SBUX based on its 5 year performance. AAPL stock has increased over 4,000% since the iPhone came out in 2007. I would invest in more MSFT first before buying SBUX.

All three stocks, AAPL, SBUX, MSFT, have what Warren Buffett has called a wide moat, which means they are highly successful companies with lots of protection against the competition.

The Case for Microchip Stocks

I’m also looking at microchip stocks and anything connected with graphics cards like AMD and NVDA, which have performed extremely well during this pandemic.

There has been a microchip shortage for well over a year now, and these is a result of two things: 1) the demand for microchips is exceeding the ability to manufacture them, and 2) because of the pandemic there is a supply chain bottleneck, which affects anything from smartphones to electric vehicles.

Once manufacturing is ramped up to satisfy the demand and supply chains get back on track, we should see these microchip companies produce at the level that is needed. And their stocks will outperform. Well, already these stocks are outperforming.

Best Microchip Stocks

Here are just a few of the microchip stocks I’m watching:

Broadcom (AVCO), Qualcomm (QCOM), Applied Materials (AMAT), Taiwan Semiconductors (TSM), Microchip Technology (MCHP), ON Semiconductor (ON), Nvidia (NVDA), Advanced Micro Devices (AMD).

Article Referenced: These two popular stocks have enough pricing power to withstand inflation, traders say

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randomguru

Portfolio Manager & Musician

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