Plurimi Wealth's Patrick Armstrong believes margin squeeze is the 'biggest risk' for equities — but some stocks could beat the trend.
Profit margins are getting squeezed as inflation remains at elevated levels, with a slew of companies — including Walt Disney , PepsiCo and Spotify — all warning of margin pressures, casting a pall over earnings growth in the quarters ahead. Patrick Armstrong, chief investment officer at Plurimi Wealth, believes this is the "biggest risk" for equities looking ahead. He said that market expectations for S & P 500 earnings next year looked too high, given the looming pressures.
"Consumers are going to face difficult choices on where they spend, but eating will be one thing they're always looking to spend money on," he said. His top picks in the space are food processing firm Archer-Daniels-Midland , fertilizer maker Mosaic Co ., agricultural chemical and seed company Corteva , as well as farming machinery manufacturer Deere & Co . "I think grain prices probably are going to continue to move higher.
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