Inflation-Hedging Plays: Companies Poised For Profit

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Just because prices are going up doesn't mean your portfolio has to suffer.

An inflationary environment may be difficult for a lot of companies, but there are some names that appear poised to profit.

With oil at elevated levels , the assumption is that energy companies are solid investments. Dig a little deeper, and it,s oil services that might outperform the most, says Phil Weiss of Argus Research.

"The upstream business is more willing to increase capital expenditures and spend money on exploration, development and to slow down the depletion of the fields," Weiss said.

His best pick is Halliburton . The company has a proven track record with shale drilling for natural gas. Weiss says those methods might soon be used beyond natural gas.

Another name he likes: Noble Energy . It's an independent energy company with reserves of 1.1 billion barrels of oil equivalents, and assets totaling over $13 billion. Weiss says Noble was dragged down by the Gulf oil spill, but the company has a lot of international exposure.

If oil services is too narrowly focused, ConocoPhillips is Weiss' recommendation out of all the major integrated companies. It is restructuring and buying back stock; leaner and meaner with fewer shares could really pump up earnings per share.

"At the end of the day, you're going to end up with a stronger company, and when it gets to the point where it is ready to grow, it's going to be better positioned," Weiss.

If oil is too dirty for you, and you want luxury goods, Oppenheimer's Brian Nagel says Tiffany is "the" pick.

Companies like Tiffany that have very strong brands are easily able to pass along costs to consumers because consumers are in large part "paying for the brand," Nagel said.

Other inflationary plays that he likes: Home Depot , Lowes and Williams Sonoma .

"There are items out there like TVsthat are extremely price-sensitive. Consumers are willing to take the time to look for the cheapest product," Nagel said. "Home improvement isn't like that." ?

If you need a hammer, you need it—and probably don't know how much it should cost.

As for the logic on Williams Sonoma, Nagel said the company reacted extremely well to the recession and its online business will be get even bigger moving forward.

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Disclosure information was not available for Phil Weiss, Brian Nagel or their companies.