I’m thinking about how to tailor my investment strategy as inflation soars around the world. Loading up on some inflation-resistant shares could be a good idea to help boost my wealth.
Buying stocks like this doesn’t just have to be a defensive action. There are plenty of shares that could actually benefit from rising consumer prices. Here are two from the UK that I’m considering buying today.
Investing in real estate stocks is one good idea in inflationary times. This is because the rents that property owners charge tend to rise in line with broader price increases.
I’m thinking of capitalising on this by investing in Tritax EuroBox (LSE: EBOX).
I already own the company’s UK-focused cousin Tritax Big Box REIT. And I’m considering buying this other stock, thanks to its large geographical footprint that provides added protection through diversification.
Tritax EuroBox operates large warehousing and distribution spaces in places like Germany, Italy, Spain and Poland. I’m expecting demand for its so-called big box facilities to rise over the long term as e-commerce activity keeps growing.
That said, the business might suffer some strain in the near term as economic conditions worsen on the continent. Indeed this week, the Federation of German Industries more than halved its GDP growth forecasts for 2022, to 1.5%.
Trouble in regional engine room Germany will have serious economic ramifications for the entire eurozone. Tenants in the other countries Tritax EuroBox operates in are likely to suffer too as German growth slows.
Boosting my exposure to commodities stocks is another way to protect myself against soaring inflation. I’m thinking of doing this by acquiring Antofagasta (LSE: ANTO) shares.
This FTSE 100 share concentrates on the production of copper in Chile. The red metal is a particularly good inflationary hedge because of its wide range of uses.
It’s a key material in everything from consumer electronics, buildings, industrial machinery, cars and even jewellery. Its critical role in everyday life means prices of the metal can rise sharply during times of strong broader inflation.
A 2017 report from Bloomberg Intelligence illustrates this point perfectly. This showed copper values increases 18% for every 1% rise in consumer prices in the previous 25 years.
Mining shares like Antofagasta naturally benefit from higher commodity prices and so do their shareholders. Bigger profits can help the share price and prompt other benefits like larger dividends. However, mine production problems can be common and disastrous for a company’s earnings.
Still, it’s my opinion that the benefits of owning Antofagasta in the current climate outweigh this risk. Besides, I’d buy the business as a way to play the new ‘commodities supercycle’. Demand for copper is tipped to soar over the next decade as consumption from electric vehicle manufacturers and the renewable energy sector surges.
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Royston Wild owns shares in Tritax Big Box REIT. The Motley Fool UK has recommended Tritax Big Box REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.