7 Stocks to Buy if Inflation Remains Higher for Longer

Walmart Inc. (NYSE: WMT) stock has delivered an average total return of 30.67% during the five-year period of 2020 through 2024. That’s more than double the 14.87% total return of the S&P 500 over the same period. The retail giant has shown that it can continue to grow revenue and earnings despite its core consumers dealing with generationally high inflation and interest rates. 

Past performance isn’t always indicative of future results. But there’s plenty of evidence to suggest that Walmart will continue to be one of the retail stocks to outperform the market. In 2024, the company noted that it was capturing the dollars of higher-income consumers who were looking for value. This was particularly important as the company reported that its core consumer is spending the same amount but buying fewer items, particularly discretionary items. 

Walmart is also becoming a significant e-commerce player—it reported a 27% increase in e-commerce revenue in its most recent quarter. The company is also becoming a free cash flow machine while still rewarding investors with a dividend that has been growing for 52 consecutive years. 

At 38x forward earnings, WMT stock isn’t cheap. But with plans in place to grow or remodel over 150 stores in addition to acquisitions to grow its advertising business, Walmart is well positioned for future growth.  

Inflation is generally seen as a problem for banks because a significant portion of a bank’s revenue comes from interest on the loans they service. But inflation frequently leads to higher interest rates. And that can be highly profitable for a bank like JPMorgan Chase & Co. (NYSE: JPM).  

The bank’s revenue and earnings are up year-over-year in 2024 despite year-over-year lending revenue being down in both its Consumer & Community Banking and Commercial & Investment Bank divisions. This should get a lift as the Federal Reserve lowers interest rates, even if the pace of those cuts is slower than first outlined. 

Another bullish catalyst for JPM stock in 2025 comes in the form of less regulation, particularly the Basil III Endgame that JPMorgan CEO Jamie Dimon has spoken out against.

JPM stock has averaged a total return of around 20.5% over the past five years. That's above the S&P 500 and speaks to the bank’s ability to perform for its customers and its shareholders no matter what’s happening in the economy.  

As of December 16, 2024, JPM stock appears to be trading at a discount to projected earnings. But analysts are raising their price targets for the stock. 

Visa Inc. (NYSE: V) is evidence that consumer spending is holding up, even among those most impacted by inflation. Visa delivered higher year-over-year revenue and earnings in every quarter of its 2024 fiscal year.  

This performance came despite what would appear to be nearly impossible comparisons. In its most recent quarter, Visa also rewarded shareholders with $5.8 billion in share repurchases and a seven-cent increase in its dividend, which was an increase of over 7%. 

At this point, it’s nearly impossible to bet against the consumer heading into 2025. And even if there is a softening in lower-income consumers, inflation has been less of a problem with higher-income earners. It’s also important to remember that Visa’s role as a payment servicing provider means it does not have to set aside money for credit losses, delinquencies, etc.  

And although the consensus price for V stock is only 2.5% higher than the stock’s closing price on December 16, 2024, two analysts have raised their price target for the stock to $360 and $375, respectively, which would market gains of over 15% or 20%. 

Caterpillar Inc. (NYSE: CAT) is another stock that’s likely to perform even if inflationary pressures continue. Despite a two-year contraction in the manufacturer’s PMI, Caterpillar has continued to deliver strong results. In its third quarter 2024 earnings report, revenue fell slightly year-over-year. However, the company continued to beat year-over-year earnings numbers.  

The industrial equipment maker is a beneficiary of the infrastructure spending that’s been making its way into the economy. Much of that spending is contractually obligated through 2025, which should keep the company’s top and bottom lines healthy.  

However, CAT stock has delivered an annual average return of over 38% in the last five years. And despite a return of over 28% in 2024 (which is in line with the S&P 500), analysts are raising their price targets. JPMorgan Chase gives the stock a price target of $515, which is 28.8% higher than its closing price on December 16, 2024. 

To some investors, owning stock in a paint company may seem as exciting as watching paint dry. But institutional investors have been starting or adding to their positions in The Sherwin-Williams Company (NYSE: SHW) in the past 12 months. 

The enthusiasm for SHW stock is based on an expected recovery in the housing market in 2025. But even if sticky inflation causes that rebound to take longer than expected, institutional investors believe that the market for home improvement is already recovering. Paint is a cost-effective home improvement. Demand should remain steady if the Federal Reserve continues to lower interest rates independent of inflation.  

As of December 16, 2024, SHW stock is fairly valued at the midpoint of its Q4 2024 guidance. But analysts are projecting 12% earnings growth in 2025 and have started to raise their price targets. The Sherwin-Williams analyst forecasts on MarketBeat show Morgan Stanley with the highest price target of $450, which is a 15% gain. 

McKesson Corp. (NYSE: MKC) is a leader in healthcare, which has been an evergreen sector for over 15 years. However, the reason McKesson makes this particular list is the stock’s beta value.  

Any stock with a beta value below 1 is considered a low beta stock. This means that it has less volatility than the S&P 500. Low-beta stocks that show a strong correlation with the consumer price index tend to have market-beating returns when inflation is rising. MKC stock has delivered an average annual return of 68% in the last five years. And even with the rate of inflation cooling this year, the stock is still up more than 23% with less than two weeks left in 2024.  

Analysts are forecasting approximately 12% earnings growth in 2025, which correlates with the consensus stock price, which shows a gain of the same amount. However, Citigroup recently raised its price target for McKesson stock to $713 from $630.  

Chipotle Mexican Grill Inc. (NYSE: CMG) has delivered an annual average total return of over 59% in the last five years. That’s why, after a 50-for-1 stock split in June and the departure of their popular CEO Brian Niccol, some investors may wonder if there’s still room for Chipotle stock to run. 

However, there’s something to be said for leaving a company in better shape than when you got there. And Niccol has done just that. Chipotle remains the category leader in the fast-casual space, and with the company’s Chipotlane, it has cracked the code on mobile ordering. In fact, digital orders accounted for 34% of the company’s revenue in Q32024.  

The Chipotle analyst forecast on MarketBeat shows a consensus price target of $66.07, which is just a 2% increase from the stock’s closing price on December 16. However, analysts are beginning to raise their targets, suggesting expectations of higher earnings in 2025.