2 Stocks That Will Rise with Inflation

Rising inflation is bad for the stock market, but some stocks go up when inflation goes up. With inflation on the rise again, it makes sense to add these great stocks to your portfolio now.

The latest Consumer Price Index report is in, and it shows inflation up 5.4% from last year, the highest jump since August 2008. That was knee deep in the global financial crisis.

Whenever a new report about higher prices comes out, Wall Street worries and stocks slip. The fear is that rising inflation will cause the Fed to pump the brakes and raise interest rates to slow the economy down - a move that hurts stocks.

While Wall Street and retail investors are sweating about the uncertainty over what the Fed may or may not do, our experts have uncovered two stocks that will rise alongside inflation rates.

Here's how to protect your money and profit when inflation goes up with the best inflation stocks...

Add This Top Inflation Stock Now

Money Morning Quantitative Specialist Chris Johnson wants you to experience the right kind of inflation - the kind that sends your investment up two times in six to eight months.

He thinks that impenetrable stock is in steel, specifically VanEck Vectors Steel ETF (NYSE: SLX).

Exchange-traded funds (ETF) are a great way to add diversity to your portfolio; diversification is important in any successful portfolio. And since SLX tracks the larger domestic and international steel manufacturers, you'll be able to own shares of variety of steel manufacturers all in one low-cost, low-risk investment.

The pandemic suffocated the American steel industry last spring. It forced manufacturers to shut down production as they held on by a thread in an imploding economy. As the recovery began, factories were slow to resume production. That created a massive steel shortage.

Chris views this as a "fundamental bull's dream."

Big picture: The steel industry looks great right now. In general, commodities' prices typically rise when inflation is accelerating, and they offer protection from the effects of inflation.

Steel prices are skyrocketing as the United States approaches the largest infrastructure spending initiative since World War I. The reopening economy is helping to further drive that steel boom.

Still, analysts are lowballing their price expectations. Unlike valuations assigned to Big Tech and other larger-cap sectors, steel sector's valuations are freakishly low.

But Chris expects that to change. As the technicals remain strong and the outlook continues to brighten, analysts will start upgrading their price targets, which will heat up the sector.

That's exactly why it makes sense to own the broader ETF (exchange-traded fund) instead of finding particular companies to invest in - it gives you the opportunity to invest in companies that are building or making steel products in a single investment. Some of those companies include ArcelorMittal, United States Steel Corporation, and AK Steel Holding Corporation.

Steel ETFs have been around since 2011, and VanEck Vectors was the first such fund released by the commodity specialists. With more than $2.9 billion in assets, the ETF is a low risk, low cost way for investors to tap into the steel industry.

But steel stocks are just one of the stocks that will go up with inflation.

Money Morning Chief Investment Strategist Shah Gilani has a play to further diversify your commodity portfolio.

This Stock Goes Up When Inflation Rises

Commodities were cheap and caught a massive momentum push higher as ETF investors jumped into all the commodity funds they could find.

This caused the buying of futures, which make up most of those ETF underlying assets, which steepened the "contango" curve of those futures, which caused more buying as inflation was expected to get more pronounced over time.

This is a typical commodities "turn" where early-stage investment is met with shortening as some big commodities investors don't believe commodities are in fact heading into a "super cycle."

As the wannabe futures traders got shaken out, rates fell, and so did those commodities.

All things considered, Shah's favorite play is mining and commodities-based stock Rio Tinto Plc. EDR (NYSE: RIO). The company searches for and extracts a variety of minerals worldwide, with the heaviest concentrations in North America and Australia.

Iron ore is the dominant commodity, and that bodes well for the next wave of commodity investors who aren't scared away by the current state of the economy.

Round Two is coming. That'll be a bounce off the recent sell-off lows, and commodities that ran too far too fast will ride it.

Now is the time to reposition yourself, because that's about to happen.

"The bell for Round Three will be heard," Shah explains, "when even a few of the commodities that ran up and came back down get back to their February and spring highs."

That wakeup call will attract the chasers again and a new "base" will have formed, which hard and soft commodities can combine and move higher. Ore and metals like iron and copper will move higher.

As Shah says, "There's no need for fear here. Just buy RIO and enjoy the ride - and inflation."

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You've probably seen our Chief Investment Strategist Shah Gilani on TV. You can catch him every week on FOX Business's "Varney & Co.," and he's also a frequent guest on CNBC.

Shah's goal is to show everyday folks how they can achieve financial freedom. And with his Money Map Report, you'll have the information, recommendations, and step-by-step instructions you need to learn how to build a powerful portfolio - fast.

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