The risk of stagflation is back due to the ongoing conflict in the Middle East and sustained labor market weakness in the U.S. This term refers to the situation where economic growth slows down while inflation accelerates.
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This article highlights three exchange-traded funds (ETFs) investors can watch out for should stagflation return, as analysts on Wall Street have been warning. The funds are the iShares U.S. Healthcare Providers ETF (IHF), the First Trust Nasdaq Food & Beverage ETF (FTXG), and the Fidelity MSCI Utilities Index ETF (FUTY).
The companies that constitute these funds continue to enjoy solid demand, even during periods of economic weakness, as their products and services are indispensable. The funds were selected for their Buy rating and significant upside potential.
iShares U.S. Healthcare Providers ETF (IHF)
IHF focuses on administrative and service-oriented companies in the healthcare industry, and as a result, it maintains its key holdings in hospitals, insurance companies, and diagnostic service providers.
Although the ETF has fallen about 11% since the start of the year, IHF still offers about 32% upside. This is based on analysts’ Moderate Buy consensus rating and the average price target of $55.45.
First Trust Nasdaq Food & Beverage ETF (FTXG)
FTXG aims at the consumer staples industry, primarily targeting food, beverage, and tobacco companies. This sector is known for producing essential items required for everyday life.
The ETF has only risen about 4% year-to-date but offers a much bigger upside of about 14%. The upside is based on analysts’ consensus Moderate Buy rating and average price target of $24.81.
The Fidelity MSCI Utilities Index ETF (FUTY)
FUTY manages stakes in electricity, water, and natural gas companies to provide investors with exposure to the utilities sector.
The ETF has gained about 6% YTD and could rise about 11% further over the next 12 months. That upside is based on the average price target of $64.78 and analysts’ Moderate Buy consensus rating.
