Inflation Is Rising: Here Are 3 TSX Stocks I’d Hold Onto

Canada’s inflation rate jumped to 4.1% in the month of August. This was the highest it had reached since 2003. Investors should be prepared to take advantage of stocks that can thrive in this environment. Today, I want to look at three TSX stocks that I’m looking to hold in the face of this development. Let’s jump in.

Why I’m targeting real estate as inflation jumps

Back in February, I’d discussed why Canada’s housing market looked strong for the long term. Policymakers have shown little interest in taking measures to significantly cool Canadian real estate. Indeed, the Bank of Canada (BoC) has indicated that inflation may be here to stay for the near term. Historically low interest rates, friendly borrowing, and high demand should underpin this market going forward.

Atrium Mortgage (TSX: AI) is a Toronto-based company that provides financing solutions to real estate communities across the country. Its shares have climbed 12% in 2021 as of close on October 7. The TSX stock has slipped 1.6% month over month.

In Q2 2021, the company delivered net income growth of 8.2% year over year to $10.6 million. Meanwhile, Atrium was able to largely offset $148 million in repayments with $93 million in originations. This TSX stock last had a favourable price-to-earnings (P/E) ratio of 15. Better yet, it offers a monthly dividend of $0.075 per shar. That represents a tasty 6.3% yield.

Don’t sleep on commodities stocks in this climate

Commodities had a hot start to 2021. That momentum was challenged in the spring before prices enjoyed a run up again in the summer. Russel Metals (TSX: RUS) is a Mississauga-based distribution company that distributes steel and other metal products in North America. Shares of this TSX stock have climbed 42% in the year-to-date period. This is a stock worth targeting as inflation continues to rise.

The company unveiled its second-quarter 2021 results on August 5. Revenues rose to $1.06 billion — up from $588 million in the prior year. Moreover, adjusted EBITDA increased to $178 million compared to $32 million in the second quarter of 2020.

This TSX stock possesses a P/E ratio of 9.7. That means investors are getting some nice value, even after Russel’s impressive run so far in 2021. It last paid out a quarterly dividend of $0.38 per share, representing a solid 4.7% yield.

Here’s a grocery stock I’d stash with inflation on the rise

Grocery-focused TSX stocks have been a reliable hold since the beginning of the COVID-19 pandemic. Now, investors need to take a second look as inflation erupts. Indeed, new research from Dalhousie University’s Agri-Food Analytics Lab suggests that Canada’s food price inflation is hovering around 5%. This is well above Statistics Canada’s estimate of 2.7% over the past 12 months.

Empire Company (TSX: EMP.A) is a grocery retailer that owns and operates top brands like Sobeys, Farm Boy, IGA, and others. This TSX stock has increased 7.9% in 2021. Its shares have dipped 5.2% over the past month.

In the first quarter of fiscal 2022, Empire delivered same-store sales growth of 2.2% excluding fuel. Its gross profit rose $63.6 million year-over-year to $1.91 billion. This TSX stock has a favourable P/E ratio of 14. It last paid out a quarterly dividend of $0.15 per share, which represents a modest 1.5% yield.