Why Rising Costs May Not Weigh On Industrials, How Investors Can Hedge Inflation

On CNBC’s “Trading Nation,” Gina Sanchez of Lido Advisors and Matt Maley of Miller Tabak discussed the industrials sector after Fastenal Company FAST reported its fourth-quarter earnings and noted rising wage pressures.

While other industrials could have similar complaints, Fastenal’s results indicate the economic reopening is “alive and well” and that industrial activity is very strong right now, Sanchez said.

The scenario of an increase in wages and an increase in costs related to logistics isn't that much of a problem because the pricing power of industrials has been very strong. They have hiked prices, and their margins have not been impacted, she noted.

See Also: Why Rising 10-Year Treasury Yields Are 'Not Bearish' For S&P 500

Given the inflation, Maley discussed what investors can buy to have a hedge on both sides. He recommended tech stocks, like Qualcomm Inc QCOM, noting it offers a 2.2% dividend yield.

Although Texas Instruments Incorporated TXN offers the same, Maley said Qualcomm is not oversold. Qualcomm has lost around 25% year to date and its RSI (relative strength index) shows that the stock is more oversold than during the lowest time during the pandemic, he added.

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Posted In: EarningsLong IdeasNewsEconomicsMediaTrading IdeasCNBCGina SanchezMatt Maley