Deflation is a scenario where the economy is facing three major problems, namely, high inflation, slow growth, and rising unemployment. Sound familiar? This is because this is the reality now, and this situation can continue during the war in the Middle East. While gas prices are near their highest level since 2022 at $3.50 per gallon, non-farm payrolls fell by 92,000 in February compared to an estimate of 50,000 growth, dealing another big blow to the economy.
The Federal Reserve is also caught between a rock and a hard place, as cutting rates will add fuel to inflation, while raising rates is also not a good proposition for corporate America.
So, as investors, how should our portfolios move? Is there no silver lining? There certainly is, and here are three top names from our list of stagflation stocks that could act as a hedge against the uncertainty of the uncertain economic times we’re living in right now.
There’s nothing better than heeding sage Warren Buffett’s advice in times of turmoil and piling on his favorite stock, Coca-Cola ( KO ). Founded in 1892 and operating in more than 200 countries, Coca-Cola is the largest beverage company in the world and the owner of seminal brands such as Coca-Cola, Sprite and Fanta, among many others.
With a market value of $334.6 billion, KO stock is up 10% on a year-to-date (YTD) basis while offering a dividend yield of 2.65%, which is higher than the sector median. Notably, the company is a “dividend king,” having consistently raised dividends over the past six decades.
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Meanwhile, the company’s latest results for Q4 2025 were mixed, with revenue missing but earnings beating estimates. Net operating income increased 2% year-over-year to $11.8 billion, while earnings rose 5.5% to $0.58 per share over the same period. Not only was this above the consensus estimate of $0.56 per share, but it was also the ninth consecutive quarter of earnings beats from the company.
2025 sees the company reporting net cash from operating activities of $7.4 billion, up from $6.8 billion in 2024, as the company closed the quarter with a cash balance of $10.3 billion. This was much higher than the short-term debt level of $1.8 billion.
Thus, analysts have assigned a consensus rating of “Strong Buy” to the stock, with an average target price of $84.17, which indicates a potential upside of about 8% from current levels. Of the 24 analysts covering the stock, 19 have a “strong-buy” rating, two have a “neutral-buy” rating, and three have a “hold” rating.
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We then turn our focus to Energy Transfer ( ET ), an energy infrastructure company that could benefit from a potential increase in demand for US energy exports. Established in 1996, it is a medium-sized energy infrastructure company. It does not produce oil or gas. Instead, it provides the infrastructure needed to move and process energy products.
With a market value of about $64 billion, ET stock is up 12% on a YTD basis. The stock also offers a dividend yield of 7.15%, which is higher than the sector average.
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And as with Coca-Cola above, ET results for Q4 2025 were also mixed. However, ET reported a loss in revenue, not revenue. In fact, ET has not reported a beat in earnings for three straight quarters.
Revenue for the quarter reached $25.3 billion, a 29.5% increase over last year. Additionally, while natural gas liquids transportation volumes were 5% higher than last year, crude oil transportation volumes were 6% higher over the same period.
While earnings of $0.25 per share were down from $0.29 per share in the year-ago period, they fell well short of the consensus estimate of $0.37 per share.
Net cash from operations for the year also fell to $10.1 billion in 2025 from $11.5 billion in the year-ago period. Overall, Energy Transfer closed the quarter with a cash balance of $1.3 billion, well above short-term debt levels of $270 million.
Overall, analysts rated the stock a “strong buy” consensus. The average target price of $21.68 indicates a potential upside of about 18% from current levels. Of the 17 analysts covering the stock, 12 have a “strong-buy” rating, one has a “neutral-buy” rating, and four have a “hold” rating.
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We conclude our list with a leading name from the biotechnology sector. Founded in 1987, Gild Science (GILD) is one of the most important biotechnology companies in the world, particularly known for HIV and antiviral therapies. Its main therapeutic areas include HIV/AIDS, liver disease, oncology, inflammatory diseases, and antivirals.
Its market cap currently stands at around $182 billion, while GILD stock is up 20% on a YTD basis. In addition, the stock also offers a dividend yield of 2.20%.
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Notably, Gilead’s results for the most recent quarter were marked by defeats on both revenue and earnings. While revenue rose 5% year over year to $7.9 billion on strong sales from HIV and liver disease products, earnings actually fell 2.1% to $1.86 per share over the same period. However, not only was it above consensus estimates of $1.81 per share, but it was also the company’s eighth consecutive quarter of earnings beats.
Meanwhile, net cash from operations for the year was about $10 billion, down slightly from 2024’s $10.8 billion, as Gilead closed the year with a cash balance of $7.6 billion. This was lower than current liabilities of $11.8 billion.
Based on this, analysts rated GILD stock a “Strong Buy” consensus with an average target price of $158.11, which indicates a potential upside of about 6.4% from current levels. Of the 32 analysts covering the stock, 22 have a “strong-buy” rating, two have a “neutral-buy” rating, and eight have a “hold” rating.
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As of the date of publication, Pathikrit Bose did not have any positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
