Inflation Profit
Thereโs a saying that goes, โOne manโs struggle is anotherโs success,โ and that can be applied to the inflation problem in the United States. Inflation is hurting businesses and the economy, directly or indirectly. Inflation causes companies to readjust their cashflows, mostly to the negative side, and itโs linked with supply chain pressures, which can decrease profit and hurt consumer spending. Even with the government reassuring the fact that itโs a short-term effect, itโs still a problem, but not for everyone.
Yes, some companies are benefiting from the inflation crisis, data shows. A study from FactSet found that 2 out of the 3 biggest publicly traded companies in the United States have reported higher profit margins, and industries like manufacturing and retail are reporting more profit. Manufacturing companies are facing heavy demand to create products quickly as consumer demand is still very high, so what theyโve been producing has been bought instantly by desperate businesses. Although costs are rising, especially labor costs, some companies have seen that an adjustment in pricing have offset those negative effects, leaving them in a great space financially. For example, Ametek, a company that manufactures aerospace and medical instruments, said in a report that price increases have been able to offset the supply chain and worker costs, and still have money left over, which is crazy to hear. However, these price hikes wonโt be effective for long as consumer demand is starting to decrease, which gets rid of the incentive. Have you invested in a company thatโs profiting through the inflation period?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.