Worries over soaring inflation have been the primary driver of market sentiment in recent weeks. Highlighting such concerns, data released earlier this month showed U.S. consumer prices jumped by the most in nearly 12 years in April.
As such, technology stocks have fallen out of favor, with investors instead piling into value names, which are typically companies that are more sensitive to economic cycles and can hold up better in an environment where inflation may be heating up.
Below we highlight two proven year-to-date winners that are positioned to increase gains as inflation worries impact markets.
1. Bank of America
- Year-To-Date Performance: +39.1%
- Market Cap: $356.8 Billion
Bank of America (NYSE:BAC)—which services approximately 10.7% of all American bank deposits—has thrived this year, reaping the benefits of a recovering economy, robust investment banking activity and narrowing credit loss exposure.
Shares of the Charlotte, North Carolina-based lender have climbed by around 39% year-to-date, far outpacing the comparable returns of both the Dow Jones Industrial Average and the S&P 500. Year-over-year, shares of the banking behemoth have gained 84%.
BAC stock, which has outperformed industry peers such as JPMorgan Chase (NYSE:JPM), and Citigroup (NYSE:C), ended at $42.16 on Tuesday, not far from its all-time high of $42.94 touched on May 10.
At current levels, BofA has a market cap of roughly $357 billion, making it the second biggest U.S. banking institution, and the eighth largest in the world.
Bank of America reported impressive first quarter results on Apr. 15, crushing expectations for both earnings and revenue.
The banking giant reported earnings per share of $0.86, up 115% from EPS of $0.40 in the same quarter a year earlier. Revenue totaled $22.9 billion, easily topping estimates of $21.9 billion, amid booming trading and investment banking results.
Fixed-income trading revenue jumped 22% from the year-ago period to $3.3 billion, while equities trading grew 10% to $1.8 billion. The firm also posted a 62% increase in investment banking fees to $2.2 billion, fueled by a 218% surge in equity underwriting fees.
CEO Brian Moynihan said in the earnings statement:
“While low interest rates continued to challenge revenue, credit costs improved and we believe that progress in the health crisis and the economy point to an accelerating recovery.”
To add to those encouraging numbers, Bank of America’s board of directors also authorized a $25 billion share buyback program.
Taking that into consideration, BAC stock still looks attractive going forward—despite strong year-to-date gains—given the improving outlook for economic growth and reduced loan losses.
Honorable mentions: Wells Fargo (NYSE:WFC), PNC Financial Services (NYSE:PNC), and U.S. Bancorp (NYSE:USB)
2. The Mosaic Company
- Year-To-Date Performance: +58.5%
- Market Cap: $13.1 Billion
The Mosaic Company (NYSE:MOS), through its subsidiaries, produces and markets concentrated phosphate and potash crop nutrients worldwide. The company's assets include phosphate rock mines in Florida, Louisiana, Brazil and Peru, and potash mines in New Mexico, Saskatchewan, and Brazil.
As one of the world’s leading fertilizer makers, it has benefitted from a potent combination of a booming farm economy and a surge in agricultural commodity prices, which recently climbed to their highest levels in almost a decade.
Year-to-date, Mosaic shares have gained 58.5%, easily outperforming the broader market by a wide margin. Even more impressive, shares have more than tripled in value in the last 12 months, jumping 232%, as soaring corn and soybean prices boosted investor sentiment on the producer of potash and phosphate fertilizers.
MOS stock reached a new all-time high of $38.22 yesterday, before closing at $36.47, giving the Tampa, Florida-based agriculture giant a market cap of around $13.1 billion.
Mosaic announced earnings and revenue which easily topped consensus estimates when it released first quarter financial results earlier this month.
Earnings per share soared more than 1,000% from the year-ago period to $0.57, better than expectations for EPS of $0.53. Revenue, meanwhile, climbed 28% year-over-year to $2.30 billon, benefitting from higher sales volumes, and rising grain prices.
Comparatively, Mosaic posted a loss of $0.06 per share in the same period last year on revenue of $1.8 billion.
Looking ahead, Mosaic’s management said the outlook for the rest of 2021 continues to be favorable, citing strong demand and pricing fundamentals for crop nutrients.
Taking this into account, MOS shares looked poised for further appreciation in the months ahead.
Honorable mentions: Nutrien (NYSE:NTR), FMC (NYSE:FMC), and CF Industries (NYSE:CF)