Recently, Australians received unwelcome news: the Reserve Bank of Australia (RBA) announced that inflation is rising again. Already burdened by the high cost of living, Australians are anxiously awaiting next month's RBA meeting and whether a rate hike is possible, writes Wealth Within chief analyst Dale Gillham.
The current inflationary situation has many pondering how to mitigate the pressure, leading to the question: Is it time to consider commodity-related stocks?
Historically, commodities such as , oil, and have been effective hedges against inflation. Australia is abundant in these resources and hosts numerous companies in these sectors on the ASX.
Here are three notable ones:
Westgold Resources Ltd (ASX:WGX, OTC:WTGRF) (ASX: WGX), an Australian gold producer based in Western Australia, has seen impressive growth since relisting in 2016. Its share price has surged over 200% since November 2022, recently surpassing the float price of $1.50. The share price has also recently cleared the $2.60 level that has previously held up the stock. With the most recent break, the stock is now positioned to target the previous all time high at $3 and beyond.
Santos Ltd (ASX:STO), an oil and gas producer with nearly 40 years of trading history on the ASX, offers an intriguing opportunity despite its share price remaining around $7 for the past two years. The extended sideways movement at $7 suggests a potential strong breakout is on the horizon. As such, I would encourage you to watch this stock closely for a decisive move above $9, which could signal the beginning of the next bullish phase.
Beach Energy Ltd (ASX:ASX:, OTC:BEPTF) (ASX: BPT), operating in the hydrocarbons sector, is well-positioned to perform during inflationary periods. Like Santos, Beach Energy's share price has been stagnant since February 2020, indicating potential pent-up demand ready to be released. A strong break above the $2 level could lead to a run back to $3, offering a fantastic investment opportunity.Therefore, as inflation rises I would encourage you to consider these commodity-related stocks as a strategic move to hedge against economic pressures. They have the potential to put some well-needed dollars in your hip pocket.
Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online at www.wealthwithin.com.au.
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