Oil prices have soared in recent months, rising 48% year to date in the U.S. amid the war in Ukraine.
So investors may be wondering which stocks suffer from climbing oil prices. Bank of America has put together such a list.
It includes industrial, materials and consumer companies with statistically significant and negative correlations to U.S. oil prices. The roster excludes stocks that Bank of America analysts rate as buy.
Here are the top 10 stocks ranked by correlation, with the highest negative correlation first.
1. General Mills (GIS) – Get General Mills Inc. Report, the consumer foods company;
2. Clorox (CLX) – Get Clorox Company (The) Report, the cleaning products company;
3. Dollar General (DG) – Get Dollar General Corporation Report, the discount retailer;
4. Kimberly-Clark (KMB) – Get Kimberly-Clark Corporation Report, the personal-care products company;
5. McDonald’s (MCD) – Get McDonald’s Corporation Report, the fast-food restaurant giant;
6. Colgate-Palmolive (CL) – Get Colgate-Palmolive Company Report, the consumer products company;
7. O’Reilly Automotive (ORLY) – Get O’Reilly Automotive Inc. Report, the auto parts retailer;
8. Campbell Soup (CPB) – Get Campbell Soup Company Report, the soup company;
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9. Brown-Forman (BF.B) – Get Brown Forman Inc Class B Report, the alcoholic beverages company;
10. Newell Brands (NWL) – Get Newell Brands Inc. Report, the consumer products company.
Morningstar’s Take on General Mills…
Morningstar analyst Rebecca Scheuneman assigns cereals icon General Mills a narrow moat and puts fair value for the stock at $70. It recently traded at $66.64.
“After General Mills’ third-quarter results, we have increased our fair value estimate to $70 from $67 to account for modestly higher fiscal 2022 organic sales growth (to 5.4% from 4.7%),” she said.
Scheuneman anticipates “another round of price increases and better cash flow stemming from working-capital efficiencies.”
Her fiscal 2022 forecast for organic-sales growth “is driven by a 7% lift in price/mix (up from 6%) and a 2% drop in volumes (from down 1%), as consumers return to eating away from home,” Scheuneman said.
“Over the long term, we expect consolidated organic-sales growth of just over 2%, driven by low-single-digit growth in its packaged food segments and 10% average annual 10-year growth for pet food…”
…and on Clorox
Morningstar analyst Erin Lash gives household-products major Clorox a wide moat. She puts fair value for the stock at $161, up 31% from a recent trade at $122.85.
Clorox, like so many other companies, “is facing a rampant surge in broad-based cost pressures,” Lash said. “Beyond extracting inefficiencies to deflect these higher costs, management also intends to take prices up across a swath of its mix…”
But “despite this angst, we expect management will continue investing to ensure its prowess holds,” Lash said.
“In this context, Clorox intends to invest $500 million over the next five years to bolster its digital capabilities … and to look for additional productivity advancements throughout the organization. We view [that] as a prudent way to fuel further investments.”
In addition, “we’re encouraged Clorox’s strategic playbook remains tethered to bringing consumer-valued innovation to market and touting that fare in front of consumers…”
The author of this story owns shares of Clorox, Kimberly-Clark and McDonald’s.