I don’t think these blue-chip companies will be able to pass along higher prices to consumers. If they don’t, they’ll hurt their margins, earnings and share prices.
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New York, NY (PRWEB) February 09, 2012
Mattel, Inc. and Whirlpool Corporation both stated rising material costs in their latest quarterly earnings, reports popular financial newsletter Profit Confidential. “When the world’s largest appliance maker cites higher material costs as one of the major factors that impacted its latest earnings report, you have to pay attention,” says Michael Lombardi, lead contributor to Profit Confidential.
Lombardi has looked at several blue-chip leaders and noted that all are citing rising commodity prices as putting pressure on their margins and earnings reports. “Most of these blue-chips have been able to offset higher commodity prices by raising prices to the end consumer,” says Lombardi.
Since the Federal Reserve announced that it would be keeping interest rates near zero until late 2014, Lombardi notes that commodity prices have resumed their rise. Lombardi says “Mattel, as an example, believes that commodity prices will continue to rise in 2012.”
The other trend that worries Lombardi is that these blue-chip companies have been able to maintain their margins by raising prices. “I don’t think these blue-chip companies will be able to pass along higher prices to consumers. If they don’t, they’ll hurt their margins, earnings and share prices,” says Lombardi.
If these firms are able to raise prices, Lombardi believes that inflation will become a problem for the end consumer, who he notes is being squeezed already, with no wage growth and no jobs.
“It’s a no-win situation,” Lombardi states.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market... before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.