The coronavirus pandemic is causing shortages of workers for at least two reasons: for one, an outbreak of COVID-19 could lead to several days of mandatory quarantine. Secondly, with a potentially deadly virus in circulation, fewer people are willing to work. Of course, with fewer workers comes decreased production and rising costs.
In this segment from "The 5," recorded on Dec. 14, Fool.com contributor Parkev Tatevosian elaborates on three companies he's bought based on how their customers are responding to inflationary pressure.
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Parkev Tatevosian: Yeah. Earlier I made those changes to get into Disney (DIS 0.18%), Starbucks (SBUX 1.00%), and Coca-Cola (KO 1.50%), and you're right, I follow about 50-75 companies and nearly every single conference call I've read for the last two or three quarters, management is talking about how input costs are rising, labor costs are rising. I wanted to invest in companies that can pass along those higher prices to consumers without driving the way too many of those customers and I felt that Disney, Starbucks, and Coca-Cola fit that mold. I'll also add a follow-up point that, in those companies that I follow, those that have implemented price increases, for example, Coca-Cola, Pepsi (PEP 3.62%), Petco (WOOF -1.27%), Procter & Gamble (PG 0.68%), Disney and Chipotle (CMG 0.40%)have all mentioned that they have increased prices, and they all noticed that consumers are responding better than at other times in the past. With price increases, customer demand is not falling as much as it did in other times during the past. That demonstrates there is some pricing power companies have right now.
