The stock market is going through a new wave of volatility at present. The current havoc can be attributed to concerns about rising inflation rates, as investors continue to suffer from the selling pressure on growth stocks in recent weeks.
It is not surprising that many investors cash in and walk away with their profits at these levels. Some investors might consider exiting the stock market until volatility subsides, but commodities also provide many investors with the necessary refuge from inflation.
If you are also looking for opportunities in the stock market that can give you exposure to commodities as an inflation hedge, Nutrien (TSX: NTR) (NYSE: NTR) could provide you with a viable solution.
A surge in raw materials
Nutrien has put in an impressive performance in recent weeks, and it looks like the title still has the momentum to keep going. Rising inflation has driven up commodity prices, giving companies like Nutrien increased revenue. The company’s upside potential has been around for a long time, but investors who bought it before the recent rise are showing exceptional returns.
Commodities could support the rise, as interest rates remain low and the US dollar weakens. Growing demand for everything from petroleum to food and even base metals is also expected to continue over the medium term. Current commodity prices could increase further in the coming months.
Nutrien is one of the companies expected to grow if commodities can support the surge in prices. Suppose you are an optimistic investor about the wider economy, but want to be cautious against growth stocks in a volatile market environment. Then Nutrien could be a nice addition to your portfolio.
Nutrien’s first quarter earnings report reflects the positive development of the business, as the current environment continues to turn into more favorable conditions. The company generated $ 476 million in free cash flow in the quarter, nearly doubling the numbers for the same period last year.
Nutrien’s EBITDA also increased by 60% and its retail operations increased by 12% during the same period. The baseline in 2020 did not present a good picture to compare with, but the medium-term growth signal remains good news for Nutrien.
The agricultural commodity company plays a vital role in global economies by supplying the agricultural sector with the chemicals necessary for continued crop growth. Regardless of what happens to the economy, there will be a growing need for the products and services provided by the business.
Nurtrien’s stable and growing business in North America and its growing importance in emerging economies position the stock to provide its investors with exceptional returns on their investments under current market conditions.
Trading at $ 77.91 per share at the time of writing, the Nutrien share is showing a decent dividend yield of 2.85%. Investing in stocks could protect you against rising inflation rates and offer you growth in your wealth through capital gains and reliable dividends.
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This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
Foolish contributor Adam Othman has no position on the stocks mentioned. The Motley Fool recommends Nutrien Ltd.