I don’t have to tell you how bad inflation is — every trip to the grocery store hammers that home. But it’s about to get a lot worse given the trajectory of oil and gas prices. An easy way to protect yourself is the State Street Utilities Select Sector SPDR ETF (XLU), explains Sean Brodrick, editor at Weiss Ratings Daily.
Oil and natural gas prices fell for most of last year. That helped offset inflation, including the inflation driven by rising electricity prices from AI data centers (don’t get me started). But then along came Operation Epic Fury, the joint US-Israeli attack on Iran. So, of course, oil and gas prices are going up. And yeah, that’s going to be inflationary.
As an investor, you want to hold stocks and industries that can pass along inflation the easiest. My pick would be utilities. Customers can't easily avoid using utilities. Rates are regulated, but utilities generally get approval to pass costs through.
You can see utilities have been on fire since early February. Maybe Mister Market saw inflation coming.
It’s not too late to get long. That kind of breakout should take the XLU to at least $68. And if inflation heats up for longer, the XLU could really shine and go much higher than that!
Recommended Action: Buy XLU.
