Young Investors: 3 TSX Stocks to Hold as Inflation Soars

Young investors battling sky-high inflation should look to snatch up TSX stocks like Metro Inc. (TSX:MRU) in the beginning of the summer.

| More on:
think thought consider

Image source: Getty Images

Young investors have been investing in an environment of relatively stable inflation over the past 10-15 years. Unfortunately, that era of stability appears to have come to an end. Inflation in Canada reached a stunning 7.7% in the month of May. That represented its highest point since 1983. Today, I want to look at three TSX stocks that young investors may want to target in this inflationary climate. Let’s dive in.

Here’s why young investors should target grocery retailers in this climate

Food prices have been a key driver in this inflationary environment. Indeed, grocery prices rose by another 9.7% in the month of May. That has put a major squeeze on consumers over the past year. Young investors may want to snatch up top grocery retailers like Metro (TSX:MRU). This Montreal-based company operates as a top grocery and pharmaceutical retailer in Canada, with an especially large footprint in its home province of Quebec.

Shares of this TSX stock have climbed marginally in 2022 as of early afternoon trading on June 23. The stock is up 14% from the previous year. In Q2 fiscal 2022, the company delivered sales growth of 1.9% to $4.27 billion. Meanwhile, adjusted net earnings climbed 5.1% year over year to $204 million.

This TSX stock currently possesses a favourable price-to-earnings (P/E) ratio of 19. It last paid out a quarterly dividend of $0.275 per share. That represents a modest 1.6% yield.

Energy stocks have gained huge momentum on the back of soaring oil and gas prices

Oil and gas prices have also been a major factor in the pace of inflation. Young investors should consider targeting top oil and gas producers like Imperial Oil (TSX:IMO)(NYSE:IMO). This company also offers exposure to gas station retailers, which have raked in huge profits during this period. Shares of this TSX stock have climbed 26% in the year-to-date period. It is up 49% from the same period in 2021.

In Q1 2022, the company reported profit of $1.17 billion. This represented a 30-year high. Meanwhile, total revenue jumped $7 billion year over year to $12.6 billion. Shares of this TSX stock possess an attractive P/E ratio of 12. Moreover, it offers a quarterly dividend of $0.34 per share. That represents a 2.2% yield.

Restaurants have also taken advantage of high inflation

Restaurant prices have climbed alongside rising grocery bills in recent months. In this environment, young investors may want to chase those price gains and secure big income with Keg Royalties Income Fund (TSX:KEG.UN). This Vancouver-based income fund deliver royalties through its fleet of Keg restaurants. Casual in-room dining has enjoyed a nice rebound since pandemic restrictions were lifted. Shares of this TSX stock have increased 4.5% so far in 2022.

The company unveiled its first-quarter 2022 earnings on May 10. Its Royalty Pool sales climbed 106% year over year to $141 million. Distributable cash jumped 159% to $0.221/fund unit in the first quarter. This income fund currently offers a monthly dividend of $0.095 per share. That represents a monster 7.4% yield.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Wednesday, July 24

In addition to the Bank of Canada’s rate decision and press conference, TSX investors will closely watch important economic data…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Here Are My Top 5 Dividend Aristocrats to Buy Right Now

Now is the time to buy these top five dividend aristocrats at their two-year low before they recover to 2021…

Read more »

Target. Stand out from the crowd
Stocks for Beginners

5 Stocks You Can Confidently Invest $500 in Right Now

Whether it's stocks making a comeback or proven investments over decades, these five belong in your portfolio.

Read more »

edit Businessman using calculator next to laptop

Unearthing Incredible Value: 2 Dirt-Cheap Commodity Stocks That Demand Attention Today

Barrick Gold (TSX:ABX) and another great mining stock look like huge value plays right here.

Read more »

A woman shops in a grocery store while pushing a stroller with a child

New Rules for Grocers: 1 Canadian Grocery Stock That Could Soar

Metro (TSX:MRU) stock looks poised to win as it signs onto the new grocery code of conduct.

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

Is NorthWest REIT Stock the Best High-Yield Dividend for You?

NorthWest REIT (TSX:NWH.UN) offers a substantial dividend, but exercise caution with this riskier stock.

Read more »

oil and gas pipeline
Energy Stocks

TC Energy Stock Is Starting to Get Ridiculously Oversold

TC Energy (TSX:TRP) stock is one of those deep-value dividend plays for the next decade and beyond.

Read more »

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing, and artificial intelligence.

Want to Get Richer? Here Are the 3 Best Stocks to Buy Now and Hold Forever

These three stocks all have fantastic operations and years of growth potential, making them three of the best to buy…

Read more »