Deflation Stocks that Shine
To find the best stocks for deflation, look at the past winners from the recent recession to see why these stocks shined above the rest and you will have your strategy for picking deflation-proof stocks.
Gold Producers. Although technically gold is a commodity, it follows different rules. Gold, enjoys a coveted status because it is a currency hedge against deflation and inflation. Pure plays on gold mining stocks include Newmont Mining, Barricks Gold, and Goldcorp.
Discount Retailers. Any stock with dollar in its name has a better chance to add dollars to your portfolio. In 2008, during the meltdown of economy, the number one performer on the S & P was Dollar Tree which realized a 38% gain for the year. Other discounters, including Dollar General and Walmart, are good plays for capturing the wave of consumer frugality.
Do-it-Yourself Stocks. One of the few winners in 2008 was auto parts seller AutoZone, which offered continued value to consumers trying to save money by becoming their own mechanic.
Select Biopharmaceutical Companies. While health care stocks have been somewhat immune to the ill-effects of a depressed economy only a few pharma companies such as Celgene and Gilead were true outperformers in 2008. Look for companies with a strong pipeline of drugs that have been recently approved or are in late stage clinical trials.
For other ideas on investing for deflation, this article is worth a read as it offers additional advice on how investors can weather deflation through fixed income investments