Inflation rates are soaring across the globe. As such, I’m looking at the best shares to buy now that could protect my capital.
UK prices have risen sharply in recent months and the Bank of England is now forecasting an eye-watering 7% inflation rate by spring 2022. That’s the fastest rise in prices in over 30 years.
In times of rising inflation there are several companies that could perform relatively well. I’d say those that demonstrate pricing power should outperform over the coming months and years. What I mean by that is the ability to pass on price rises to customers. For instance, they might have strong brands or sell sticky products where customer demand remains steady despite higher prices.
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Best shares to buy now
In terms of pricing power, I reckon one of the best shares to buy for my Stocks and Shares ISA is technology giant Apple (NASDAQ:AAPL). Despite currently being the largest company in the world, it’s still managing to grow at pace. In fact, it recently reported that its total revenue jumped by 11% to $123.9bn.
As it has an army of loyal fans, it can easily raise prices without significantly affecting demand for its phones, laptops, and digital services.
The iPhone maker even managed to boost its gross profit margin to 44%, despite supply chain challenges that affected so many companies during the pandemic. However, more than half of Apple’s sales comes from its iPhones. Any slowdown in the smartphone market or changes in customers’ upgrade habits could have a material impact on sales growth. That being said, so far it has managed its challenges well and continues to be one of my top picks for the coming months and years.
Pricing power
Another quality company that has pricing power is Relx (LSE:REL). Previously known as Reed Elsevier, Relx is a FTSE 100 business with a market cap of £44bn. It may not be a household name, but that’s because it’s geared towards business customers. Relx is a global provider of analytics and decision tools for professionals. Its largest areas of focus are risk, scientific, medical, and legal sectors.
What I like about this business is its resilience and profitability. Relx offers relatively steady growth and strong cash flow generation. And because it has small, medium, and large customers in more than 180 countries, it offers great diversification. Lastly, its highly specialist tools and products mean that it should also have enough pricing power to keep up with rising costs.
Quality business
Relx does have an exhibitions business that suffered during the pandemic. That has been a drag on performance and may continue to do so if large events suffer any more disruption. Also, with a price-to-earnings ratio of 23, I’d say its valuation isn’t particularly cheap, although that is to be expected for a high-quality business.
Overall, I’d say it’s a good quality business that offers steady growth, pricing power, and even a small but reliable 2% dividend yield. Its last trading update was in October but I’m expecting another one soon where I’d like to see positive trends continue.
