Welcome to the Worst Inflation since 1981 — and the Only Stock and Strategy to Beat It
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When I get home from a workout — or climb back onto the dock from a trip out on the sailboat — there’s nothing like an icy cold Bud Light to defeat the heat.
That cold amber brew just really does the job: A few modest swigs is enough to send summer’s burn into a full-fledged retreat. Good stuff, right?
Well, let me share a secret.
Anheuser-Busch InBev SA (BUD), the company that makes Bud Light, can have the same quenching effect on the single-biggest threat to your money.
I’m talking, of course, about inflation.
Back in the spring (before summer’s baking season began), I predicted that inflation was destined to get worse — even much worse.
And that prediction was right on target.
A report released Wednesday said U.S. consumer inflation jumped to 9.1% in June — a surge we haven’t seen in four decades. That inflation conflagration will pressure the Federal Reserve to dial down the American economy — maybe enough to drop us into full-blown recession.
I have a solution.
I’m talking about a simple-to-follow, several-step strategy that lets you invest small amounts of money in a way that puts you on a direct path toward 4x, 5x, or even 6x gains.
It’s not a gimmick. It doesn’t involve a maybe-win-big/probably-lose-it-all speculative stock-option gambit. And I’m not talking about take-a-flier penny stocks.
In fact, I like to think of it as a kind of “alternative to stocks,” or “alt stocks” strategy.
The investing game plan that I’m talking about here starts with a focus on real companies with real businesses — companies whose shares have double-your-money potential.
Companies like Anheuser-Busch.
Let me show you exactly what I mean.
Find the Stock
Anheuser-Busch is a textbook example of an inflation-resistant blue-chip stock that can thrive in a climate where price levels are surging.I know what you’re thinking: With prices on the rise, brewers must be feeling the squeeze too. Take aluminum cans, a key vessel of choice for this thirst quencher. Those cans cost more because of rising demand and continuing supply shortfalls.
But the news is not all bad: While inflation does boost brewers’ costs, a company like BUD has brand recognition and pricing power to offset any higher expenses. (Indeed, recent inflation reports display this pricing power: Beer prices are up more than 4% on a year-over-year basis — proving that brewers are passing the expenses along to consumers.) Want still more proof?
Soft-drink giant PepsiCo Inc. (PEP) is targeting the beer market as a way of partially offsetting the grinding effect inflation is having on the rest of its businesses. Pepsi CEO Ramon Laguarta just told investors that “we want to leverage our assets for distribution. We think, in alcohol, we can bring new brands to the market.”
This “beer story” gets even better. Thanks to some hefty mergers and buyouts we’ve seen over the past few decades — including here in the U.S. market — the whole industry has slimmed down.
If you look today, in fact, there are just two mega-brewers: BUD and Molson Coors Beverage Co. (TAP), a duopoly — the next-best thing to a straight monopoly when you’re talking about pricing power to consumers.
Yeah, there’s competition from small craft brewers, but not as much as you might think.
The largest craft brewer in America, Boston Beer Co. (SAM), the maker of Samuel Adams and other brews, has less than a 4% share of the U.S. market. Meanwhile, BUD, the world’s largest brewer, has a 39% market share in the U.S. alone, while TAP (which also owns the Miller Brewing brand) has only a 20% market share. BUD is clearly the big dog in beer coolers across America (and around the world), and it shows in the company’s strong financials.
Let’s take a closer look.
Global sales hit $54.3 billion in 2021, a healthy 15.6% jump on a year-over-year basis. That contributed to bottom-line profits more than tripling compared to the year before.
Importantly, cash flow per share at $4.92 last year more than tripled the stock’s earnings per share. When you find a company whose cash flow is significantly more than its profits, you’ve identified a quality company. Cash flow basically adds back non-cash expenses like depreciation, and BUD gets high marks here.
High levels of cash flow compared to earnings means BUD has plenty of financial flexibility. That’s a big plus amid rising inflation. It also helps a company reward its shareholders through buybacks and boosted dividends.
Experts are forecasting that BUD’s modest annual dividend of 60 cents a share for last year could roughly quadruple to $2.20 a share in the next five years.
BUD’s growth prospects look strong — earnings and cash flow are expected to double over the next five years, according to Value Line estimates.
Over the long haul, a company’s share price will track its financials. So if the company’s profits and cash flow double, its stock should do the same.
BUD is an example of the “double-your-money stocks” I said to look for.
And that makes it a candidate for my strategy.
Execute the Game Plan
With my alternative-to-stocks strategy, when a company’s shares double, you’re usually looking at a gain of 400%, 500%, or even 600%.But you don’t have to let the investment fully develop — you don’t have to ride it all the way to the end — to win big.
With BUD, if one or two things break the right way, this “alt stocks” strategy could fairly easily hand you a gain of 75% — and possibly 100% or more. And that’s in a time frame as short as six to eight months.
You’re not looking at speculative levels of risk.
Now, BUD is more of a “Steady Eddie” play, with predictable, dependable gains over a long period of time — returns that are buoyed a bit by a steadily increasing dividend.
To step up the gains from this strategy, I tend to focus more on higher-paced growth companies — since their stocks have a much higher upside. In fact, they can deliver those 5x and 6x gains that I’ve talked about several times here.
The fact is that my alternative-to-stocks game plan is a strategy that:
- Will let you leverage relatively small sums into game-changing gains.
- Beat back the money-eroding impact of inflation.
- And do so at a juncture where — because stocks are so beaten down right now — this strategy is the cheapest it’s been in years, if not decades.
Just this week, I conducted a little tutorial on a Zoom call with some colleagues. As I talked, I watched the faces of my co-workers looking back at me from those little video windows we’ve become so accustomed to.
I watched — and I waited for what I knew was coming. One by one, I saw that “flicker of understanding” play across their faces — a sign that they not only grasped what I was saying, but found it downright exciting.
On July 26, you’ll get that same opportunity when you attend The 2022 Retirement Revolution. That’s where I’ll walk you through this strategy — to show you what I’ve found, and how you can put it to work for yourself.
Mark your calendar and make sure to join me.