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As multiple signs of inflation heat up, UBS recommends investors look at shares of companies with the ability to pass those costs increases onto consumers.
“The current backdrop of rising inflation should help companies with strong pricing power outperform. This relative strength does not appear to be priced in,” Keith Parker, head of UBS equity strategy, told clients in a note.
Amid a rise in commodity prices to multi-year highs, like corn and copper, some companies are indicating that they are going to increase product prices. The businesses that are able to raise prices without denting sales should see an increase to their margins over time, making them attractive investments, according to Parker.