Keep these stocks out of your portfolio if inflation continues to rage

Published Thu, Feb 10 20222:38 PM ESTUpdated Thu, Feb 10 20223:50 PM EST

With inflation at its hottest pace in decades, one market strategist found the companies most at risk for wage pressures. The consumer price index jumped 7.5% in January from the year prior, the biggest gain since 1982, the Labor Department reported Thursday. Average hourly earnings jumped 0.7% in January and are now running at a 5.7% pace over the past 12 months, according to Labor Department data released Friday. "The latest commentary from corporate managements in the Q4 earnings season shows unprecedented levels of concern about labor related issues," UBS's Alastair Pinder said in a note last week. "These headwinds are unlikely to abate soon: labor shortages are widespread." UBS found the companies most exposed to rising wage costs. The firm used wage sensitivity, median wage, labor union exposure, wage growth and earnings calls sentiment to calculate the exposure. The firm's screen of stocks with high wage sensitivity has underperformed the market by around 20% since March 2021, according to Pinder. Take a look at five stocks UBS highlighted. Walgreens Boots Alliance is one name on UBS's list. The drugstore chain in its latest quarterly earnings call highlighted rising labor costs. Executives said Walgreens must increase wages as pharmacy staff juggle prescription refills and vaccines administration. "There's been a high level of stress in the system," Walgreens chief financial officer James Kehoe said during the company's earnings call in January. Walgreen will spend about $120 million more on wages, Kehoe said at the time. Nordstrom also made UBS's screen. The company noted high costs of labor during its quarterly earnings call in November. The department store's results fell short of analysts' expectations as labor costs ate into profits. State Street is another company UBS highlighted. Compensation in the financial sector ballooned last year amid elevated business activity. Other stocks from UBS's screen include The Cheesecake Factory and Universal Health Services . —CNBC's Michael Bloom contributed reporting.

A person enters a Walgreens store in San Francisco, California, U.S., on Tuesday, April 13, 2021.

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With inflation at its hottest pace in decades, one market strategist found the companies most at risk for wage pressures.