Dump These 3 Stocks Before Inflation Eats Into Profits


  • There are likely no stocks that are completely resistant to inflation. As such, investors should avoid certain stocks that could expose them to inflation, particularly these three.
  • Cal-Maine Foods (CALM) – Although it is the largest producer of eggs in America, the recent sluggish growth in egg prices threatens its stock price and market stability.
  • WK Kellogg (KLG) – A large-scale manufacturer of ready-to-eat cereal brands, this company faces the wrath of inflation, no thanks to little recent growth in revenue.
  • Performance Food Group (PFGC) – Massive competition in the food distribution industry has affected this company’s growth. It completes this list of stocks to sell in 2024.
stocks to sell - Dump These 3 Stocks Before Inflation Eats Into Profits

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Inflation is an inevitable market factor. However, investors can protect themselves by steering clear of stocks likely to be hit by inflation for whatever reason. We are already halfway through the year, so we have more than enough time to conclude which stocks to buy and which stocks to sell.

These three stocks are among the worst performers in the market this year. Factors such as low demand, increasing competition, and low revenue turnover have made all three no-go areas. If you own any of them, you might want to consider selling them before you lose profits due to rising inflation.

Keep reading if you want a detailed review of the performance of these three stocks this year and the factors that have contributed to making them stocks sell immediately.

Stocks to Sell: Cal-Maine Food (CALM)

The Cal-Maine Foods logo on the website homepage
Source: Casimiro PT / Shutterstock.com

Cal-Maine Foods (NASDAQ:CALM) is the largest producer and supplier of fresh shell eggs in the U.S. The company almost monopolizes the egg-supplying and producing business, evident from its domination across midwestern, southeastern, and southwestern states in America. Unsurprisingly, these regions account for nearly a quarter of the entire egg consumption in the states.

With flagship products, such as Land O’Lakes and Egg-Lands Best, and its impressive stronghold on the American market, one would expect Cal-Maine Food to be among the top performers in the market. Indeed, this was the case in 2022 and most parts of 2023, but the company began to experience dwindling revenue towards the end of 2023. Analysts believe this is due to the fall in egg prices in the states.

It does not look like the company’s fortunes will pick up anytime soon, though, as food prices continue to fall globally. According to its recent quarterly report, its sales revenue continues to decline, although there have been some improvements in areas like net income. Still, it is down 41.5% in net average selling price per dozen, indicating that progress is still a long way to go. As such, I think it is one of the top stocks to sell.

WK Kellogg (KLG)

Kellogg's sign on their Canada's head office building in Mississauga
Source: JHVEPhoto / Shutterstock.com

WK Kellogg (NYSE:KLG) is an American food manufacturer of ready-to-eat cereal brands, such as Frosted Flakes, Special K, Froot Loops, Raisin Bran, Frosted Mini-Wheats, and Kashi. They are by far the biggest producers of breakfast cereal in the land and almost have a monopoly on the business, which is evident from the number of household staples they produce.

Despite this, the company has put up some poor numbers this year. Analysts believe this is due to dented food prices. If this trend continues, WK Kellogg’s slow revenue growth will only worsen, and its stock could become a victim of inflationary pressures. A combination of all these factors makes it a stock to sell.

Performance Food Group (PFGC)

Healthy food including salmon, almonds, garlic, broccoli, avocado, and lettuce

Performance Food Group (NYSE:PFGC) is a leading food distributor in the United States whose founding origins date back over 130 years. It has over 22,000 employees, and its product portfolio has expanded to over 125,000 customers, from restaurants and convenience stores to schools, hospitals, and hotels.

Despite this, the company is failing to meet investor expectations this year. According to its recent quarterly report, it made revenue of $13.86 billion. This looks impressive at first glance, but further investigation reveals that this number is 2.34% worse than the initial analyst estimate.

There is no indication that the company will recover soon amid rising inflation. As a result, now might be a good time to sell the stock if you currently own it.

On the date of publication, Joel Lim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Lim is a contributor at InvestorPlace.com and a finance content contractor who creates content for several companies like LTSE and Realtor, along with financial publications, including Business Insider, Yahoo Finance, Mises Institution and Foundation for Economic Education.

Article printed from InvestorPlace Media, https://investorplace.com/2024/06/dump-these-3-stocks-before-inflation-eats-into-profits/.

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