The COVID-19 pandemic has disrupted the industrial supply chain, exacerbating inflationary pressures. This, along with rising U.S. Treasury yields and China’s weak economic data, will likely continue to foster stock market volatility. Analysts also expect market volatility to increase if the Fed withdraws its stimulus measures. But despite this uncertain backdrop, we believe fundamentally sound stocks América Móvil (AMX), ArcelorMittal (NYSE:MT), and Ternium S.A. (TX) could be solid bets. These stocks are rated ‘Strong Buy’ in our proprietary rating system. So, let’s discuss these names.The pace of economic recovery is still uncertain due to the supply chain disruptions and consequent inflationary pressure. Moreover, continuing COVID-19 Delta variant infections are expected to continue hindering economic recovery. U.S. consumer prices rose 5.4% year-over-year in September and 0.4% sequentially. In addition, the 10-year Treasury yield climbed above 1.6% before the market opened this week, and economist Mohammed El-Erian expects market volatility to increase if the Fed withdraws stimulus measures.
Despite the lingering concerns related to the economic recovery, the S&P 500 ended the last week 1.8% higher, registering its best week since July. A solid start to the third-quarter earnings season made investors bullish. In addition, retail sales increased 0.7% from August versus analysts’ expectation of a decline.
Against this backdrop, we think betting on fundamentally strong stocks América Móvil, S.A.B. de C.V. (AMX), ArcelorMittal (MT), and Ternium S.A. (TX) could be rewarding. These stocks are rated ‘Strong Buy’ in our proprietary rating system.