Some investors think that inflation is going to undercut the market’s recovery and shock Wall Street. Others expect a modest inflation to slow but not stall the recent rally since last summer. But whatever your point of view, it’s unlikely that you think inflation is a myth.
Food inflation is taking hold in Asia. Crude oil prices are cruising back about $100 and gasoline prices are headed to $4 a gallon. Yes, inflation has arrived.
You would think that would be good news for companies in the raw materials game, since their products like steel or gold or timber would be inflating in kind. But as you’ll see, inflation can’t save all commodity and materials stocks. Here are 8 dogs in the sector to sell now:
International Paper Co: Global paper company International Paper Co. (NYSE: IP) started off 2011 strong, but has dropped -7% in the last several weeks. Zacks Investment Research also reported that IP has total debt of $8.7 billion, which isn’t an inspiring sign. IP stock is losing momentum.
POSCO: Over the past 12 months, South Korea’s POSCO (NYSE: PKX) has seen its stock price shrink -11%, compared to gains of +20% and +18% for the S&P 500 and Dow Jones, respectively. The stock may have rebounded in October, but it is back down -10% in the last five months.
Kinross Gold Corp: Since mid October, Kinross Gold Corp. (NYSE: KGC) is down -16%. Things don’t look much better in 2011, as KGC stock has dropped -16% since the start of the New Year.
Gerdau: Long-rolled steel producer Gerdau (NYSE: GGB) has seen its stock price drop -9% over the past year. Earnings wise, experts are projecting EPS of just 17 cents this quarter after the company posted EPS of 53 cents this quarter last year. Not a pleasant year-over-year development for the Brazil commodity stock.
ArcelorMittal: Over the past 52 weeks, ArcelorMittal’s (NYSE: MT) stock has slid -4%, compared to impressive gains by the broader markets. This week, the company also reported losses of $780 million for 2010, which surely has shareholders nervous.
Companhia Siderurgica Nacional: Brazilian steel producer Companhia Siderurgica Nacional (NYSE: SID) has seen its stock plummet -21% since mid April. After regaining slightly at the beginning of 2011, the stock is down -9% since mid January.
Aluminum Corp. of China: Since mid April Aluminum Corp. of China (NYSE: ACH) has experienced a stock decline of -14%. More recently, ACH has lost -6% since mid October, after rebounding slightly. This aluminum producer has not shown stability in the last year, and should be sold before more damage is done to your portfolio.
Sterlite Industries: Rounding out the list is Sterlite Industries (NYSE: SLT) which has experienced a loss of -13% in the last year. The stock’s performance hasn’t been any more encouraging in 2011, as SLT has lost -11% over the past two months.
As of this writing, Louis Navellier did not own a position in any of the stocks named here.