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Passing on the costs
With worrisome prints from the CPI index I'm trying to think of companies best positioned to pass on additional costs to consumers.
- Distributors should fare better than suppliers - I think of $FAST and grocery stores as consumers tend to shift toward store brands when prices get high -- Breakdown of discount grocer $GO can be seen here
- Leaders in consolidated markets with steady or increasing demand - $SHW is a beneficiary of continued home renovations + infrastructure bill
- $V and $MA take a cut of every transaction so they should at least track inflation
- $GLD has to become in vogue at some point (right?!)
What companies may not be able to pass on the costs?
- Auto manufactures are already dealing with supply chain issues/ labor wage issues/ chip shortages so a weaker consumer can't be good. Perhaps spending on vehicles shifts more towards the used car market and benefits the likes of $KMX or $CVNA
- Cruise liners are dependent on discretionary spending from those with disposable income $CCL $RCL
I'm surely overlooking a lot of industries effected by a presumably weaker consumer. Some may say that a higher CPI print signals that the fed should raise rates but the combination of higher costs & higher rates surely disproportionately effects the poor who depend on financing.
A lot to unpack here but I'm interested to hear how others are positioning themselves for higher inflation. I'm also interested if anyone is in the camp that inflation is in fact transitory and how you're positioning yourself to fade the news.
YouTube
Discussion of Grocery Outlet (NASDAQ: GO)
Recorded 11/23/2021Key Takeaways:-Grocery Outlet is a discount retailer with a twist. The business scales by enabling individual investors to operate their o...
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