What stocks to buy as inflation hit 7.9% in February?

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Investing in companies with pricing power could be a strong hedge against record levels of inflation, says DCLA’s Sarat Sethi after the U.S. CPI climbed again to 7.9% in February.

Sethi’s stock picks to fight persistent inflation

Companies like Disney, American Express, Visa, and Mastercard are few of the names that he expects will benefit in the current macroeconomic backdrop. On CNBC’s “Squawk Box”, he said:

Coming out of the pandemic, consumers are looking for experiences. So, companies like Disney that have not just the amusement park but also experiences in streaming. Amex, Visa, and Mastercard; if things start increasing just a little bit and you don’t see a huge pullback, they’ll have huge operating leverage.

Sethi doesn’t expect the Russia-driven surge in oil prices to result in demand destruction unless it lasts for a meaningful period of time.

Jim Paulsen’s favourite is emerging and frontier markets

On the other hand, Leuthold Group’s Jim Paulsen sees opportunity in emerging and frontier markets amidst the geopolitical tensions. In a separate interview with CNBC, he said:

I’d look at small caps that’s been outperforming this year underneath all this crisis. I would look at the cyclical sectors. And my favourite really is emerging markets and the frontier markets trade at this point.

Paulsen expects the S&P 500 index to end the year near 5,000 level.

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