3 Quality Stocks to Buy Amid Soaring Inflation

Rising inflation won’t hinder the breakouts of three quality stocks with visible growth potentials in 2022 and beyond.

| More on:
grow money, wealth build

Image source: Getty Images

Investors tend to stray away from growth stocks and move to value stocks during periods of high inflation. However, there are exceptions to this usual sentiment. Rising inflation won’t stall the growth of Hardwoods Distribution (TSX:HDI), Hydro One Limited (TSX:H), and Quarterhill (TSX:QTRH).

You can take positions in the three quality stocks as their business outlooks aren’t as hazy or cloudy compared to other companies. Despite the current complex environment, they have growth drivers that can propel the stock and deliver superior returns to would-be investors.

Industrial

Hardwoods Distribution should be in your buy list, given the federal government’s focus on housing programs and housing construction over the next five years. The $803.14 million company supplies specialty building products in North America.

Management expects robust demand for its products and favourable selling prices in 2022, supported by strong fundamentals in end markets. The new federal budget in Canada calls for the creation of 100,000 houses in five years to address the massive housing shortage and the affordability crisis.

Likewise, leading indicators for the residential construction market in the U.S. remain very positive. Besides the strategic focus on acquisitions in core markets, management believes its platform is well-positioned to capture market share. It expects organic and acquisitions-based growth going forward.

Investors can earn two ways, from price appreciation and dividends. At $33.89 per share, the dividend yield is 1.40%. Market analysts’ 12-month average price target is $72.18, or a 113% return potential.

Utility

Hydro One is the largest electricity transmission and distribution provider in Ontario. The Ontario Energy Board will amend its transmission license as ordered by the Minister of Energy early this month. This $21 billion company will develop four new transmission lines in addition to one previous transmission designation.

Mark Poweska, Hydro One President and CEO, said, “With our long history of building transmission projects and our transmission reliability record, our resilient electricity network will meet the incredible growth in the region and attract new investments.”

Current Hydro One investors are up 7.93% year to date. At $35.23 per share, this large-cap utility stock pays a decent 3.01% dividend. More importantly, you’d be investing in a recession-proof stock given Hydro One’s highly regulated utility assets.

Technology

TSX’s technology sector continues to lag the 11 primary sectors thus far in 2022. Quarterhill underperforms year-to-date (-9.10%), although a breakout is imminent. The share price of $2.44 is a good entry point considering the $4.25 (+74.2%) high price target of analysts covering QTRH. Your overall return should be higher as this tech stock also pays a 2.17% dividend.

The $277.87 million company operates in the intelligent transportation system (ITS) industry and provides tolling and enforcement solutions. Wi-LAN, its subsidiary, is a leader in intellectual property licensing. Its most recent patent license agreements are with Kyocera and Apple.

Quarterhill President and CEO Bret Kidd said after the full-year 2021, “We believe there has never been a better time to be in ITS.” Because of multiple market tailwinds, the need for ITS, and user-funded infrastructure, expect a 15% CAGR for the industry in the coming years.

Business growth

One stock each from the industrial, utility, and technology sectors is a buying opportunity. Rising inflation won’t stall their business growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns and recommends QUARTERHILL. The Motley Fool recommends Apple and HARDWOODS DISTRIBUTION INC.

More on Tech Stocks

Man data analyze
Tech Stocks

Is Shopify Stock’s Growth Sustainable?

There's a reason Shopify stock (TSX:SHOP) has been getting analyst upgrades, and investors should be paying attention.

Read more »

Shopping and e-commerce
Tech Stocks

3 Reasons to Buy Shopify Stock Like There’s No Tomorrow

Shopify (TSX:SHOP) stock jumped in share price from a stellar upgrade, but more is certainly on the way for the…

Read more »

Person uses a tablet in a blurred warehouse as background
Tech Stocks

Check Out This Soaring Stock, Up 29% From 52-Week Lows, With More Gains Likely to Come

This top tech stock is now up 29% from lows, but still down 12% in the last year. And it…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Up 50% From its 52-Week Low, Is Shopify Stock Still a Buy?

Shopify (TSX:SHOP) stock has been both a winner and loser on the TSX, but after a recent upgrade, could it…

Read more »

Dollar symbol and Canadian flag on keyboard
Tech Stocks

2 Canadian Stocks to Watch While They’re Still Dirt Cheap

These two Canadian stocks offer ample opportunities as the world shifts into not just AI but cybersecurity needs.

Read more »

A stock price graph showing growth over time
Tech Stocks

1 Hidden Catalyst That Could Ignite Dye & Durham Stock 

Dye & Durham stock surged more than 15% in the last two weeks. What is igniting the growth after a…

Read more »

a person searches for information on the internet
Tech Stocks

Before You Buy Nvidia: Here’s An AI Stock I’d Buy First 

Nvidia is the first stock that comes to your mind for AI. However, consider diversifying your AI stocks across the…

Read more »

edit Woman calculating figures next to a laptop
Tech Stocks

How to Buy UiPath Stock in Canada

UiPath is a beaten-down AI stock that trades at a massive discount to its earnings growth. Is the tech stock…

Read more »