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Highlights
- The World Bank has warned of stagflation, a combination of high inflation and low economic growth.
- According to the World Bank's Global Economic Prospects report, the war between Russia and Ukraine has exacerbated the global economic slump.
- Due to the current situation, the equities markets have recorded increased volatility.
The World Bank cut its global growth prediction for 2022 by 1.2 percentage points to 2.9 per cent due to Russia's invasion of Ukraine and the impact of the COVID-19 pandemic.
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According to the World Bank's Global Economic Prospects report, the war between Russia and Ukraine has exacerbated the global economic slump, entering a prolonged phase of sluggish growth.
The World Bank has warned of stagflation, a combination of high inflation and low economic growth.
Stagflation is defined as a period of poor economic development and economic stagnation or high unemployment. All these issues surface along with inflation. Stagflation is described as a period of high inflation that coincides with a drop in the gross domestic output (GDP).
Due to the current situation, the equities markets have recorded increased volatility. Hence, it has become tricky for retail investors to invest, but there are some ways they can protect their portfolios.
Let's look at two stocks that can help investors prepare for stagflation:
Fortis Inc. (TSX:FTS)
Companies like Fortis are valuable because they are engaged in the business of utility. Despite the economic crisis, producing power remains a key priority and consumers can cut back on their extra spending during stagflation but not on power costs.
In the first quarter of this year, Fortis' net earnings were $350 million, and it also announced its target for 2050 net-zero direct greenhouse gas emissions (GHG) for a clean future.
The utility company said that its annual capital plan of $ 4 billion remains on track, and it spent $1 billion in Q1 2022. On Tuesday, the FTS stock closed at C$ 62.3 per share.
Fortis is known for its regular dividends, and it last paid a quarterly dividend of C$ 0.535 per unit on June 1.
Dollarama Inc. (TSX:DOL)
We have selected this stock as its offers discounted products to customers, and due to inflationary and reduced earnings pressure, often people turn to discount stores to save money.
Dollarama is a retailer of discounted products, and it has shown growth over the years. The DOL stock had surged by around three per cent at the time of writing, and it was trading at C$ 71.75 per share at 10 AM EST.
In Q1 2023, Dollarama said its EBITDA increased by 20.9 per cent year-over-year (YoY) to $300 million, and diluted net earnings per share jumped 32.4 per cent to $0.49.
Please note, the above content constitutes a very preliminary observation or view based on digital trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
