Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
At this point, we’ve all been feeling the impact of inflation, especially here in the United States where headline inflation has been above 8% for the last five consecutive months.
All that inflation is eating away at the purchasing power of savings and underperforming investments, which is why it’s more important than ever to find ways to profit off of it, in order to keep pace and not get left behind.
Over the last several weeks, I’ve covered various types of inflation-beating investments, and this week we’re going to go straight to the source and talk about investing in commodities.
Raw materials including oil, natural gas, precious metals, copper, iron ore, aluminum, wheat and corn are natural hedges against inflation because in most cases the price of commodities is a key component of the rising costs in the first place.
So, as they say, if you can’t beat ’em, join ’em.
Commodities can be traded on the futures market, where commodities futures contracts are bought and sold at a certain time in the future – but for retail investors the easiest way to profit from higher commodity prices is to purchase relevant exchange-traded funds, exchange traded notes, or individual commodity stocks.
The pick I have for you today is in the third category, a company that has its hands in some of the most high-demand commodities on the market right now and combines soaring financials with double-digit dividends to create what I think is the best inflation-beating investment available right now.
Here’s the ticker…
Why This Mining Company Is a No-Brainer Buy
My current favorite commodities investment is Rio Tinto Group (NYSE: RIO).
Headquartered in London, Rio Tinto engages in exploring, mining, and processing mineral resources worldwide. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and lithium.
Of all of the uses for RIO’s commodities, there are two that I’m particularly interested in…
The aluminum, copper, and iron ore that RIO produces are critical components to building cities and infrastructure projects around the world, especially in China.
And the lithium and copper that RIO produces are both must-have inputs to building electric vehicles.
With global demand for copper, iron ore, lithium and aluminum, skyrocketing over the past 12-18 months, it’s no surprise that RIO’s financials look fantastic!
From 2020 to 2021, revenue increased 42.33% from $44.61 billion in 2020 to $63.49 billion in 2021.
On the bottom line, net income exploded 115.9% from $9.77 billion in 2020 to $21.09 billion in 2021.
In addition to stellar financials, the company’s balance sheet is great, with $13.91 billion in cash versus $12.82 billion in debt.
But here’s the best part…
Not only does RIO produce and sell commodities which are critical to the world’s growth, it also pays investors a massive 11.46% yield for holding the stock.
That makes RIO one of my favorite inflation-beating investments, hands down.
As interest rates rise over the coming months, companies like RIO need to be priorities for investors. Overvalued companies running on debt might have been some of the darlings of the market before this year, but they’re about to take a huge fall.
Anyone who owns them needs to do two things right now:
The first step? Get rid of the deadbeats from your portfolio. They aren't worth it. High debt, low margins, no products, lackluster management - all things to look for.
The second step? Profit from them on the way down.
I can show you exactly how to do that. It's a simple strategy you can implement immediately to double, triple, even possibly quadruple your money, over and over again, on these types of companies.
Follow Money Morning on Facebook and Twitter.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.
