One Wall Street bank says waning U.S. demand and persistent inflation could lead to stagflation that could hit some well-known stock names.
Barclays strategists Stefano Pascale, Anshul Gupta, Riddhiman Dass, and Tejas Shah wrote on Tuesday that Kimberly-Clark KMB, +0.01% and Procter & Gamble PG, +0.80% are at or near the top. Kimberly-Clark makes Scott toilet paper, Kleenex facial tissue, and Huggies diapers. P&G sells Pantene shampoo, Crest toothpaste, and Olay skin care.
Consumer-staple companies are in the defensive sector, where consumers buy more when times are tough, so their selection seems odd. Barclays ranks Ball BALL, +0.45%, a provider of aluminium packaging, near the top of the materials sector, which is cyclical and underperforms when the economy is weak.
The strategists at Barclays BARC, -0.05% believe the main headwind in stagflation “would come from margin pressure driven by negative operating leverage.” They said the materials sector is vulnerable to waning pricing power after fourth-quarter sales were 20% above pre-pandemic levels.

“At the single stock level, KMB (Kimberly-Clark), BALL (Ball) & PG (Procter & Gamble) top our long put screen of high-flying names with cheap vol that stand to lose the most in a stagflationary environment,” the strategists at Barclays wrote.

On Tuesday, U.S. stocks DJIA SPX COMP finished mostly higher, with the Dow Jones Industrial Average rising for a fifth straight day. Shares of Kimberly-Clark closed down by less than 0.1%. Meanwhile, Ball and Procter & Gamble shares advanced by 0.5% and 0.8%, respectively.