The "Trumpflation" Trade Could Get Worse Before It Gets Better. History Says These 2 Stocks Are the Place to Hide.

Clean energy has been hot for years, but the truth is that the global economy still runs on carbon fuels like oil and natural gas. With the geopolitical conflict in the Middle East still raging, energy prices have remained high. Inflation has been a persistent problem that is likely to linger, if not get worse, before things start improving.

Healthcare is a sector that has historically been resilient to rising prices. Simply put, people are willing to pay to live better lives. So, if you are worried about inflation, you may want to seek shelter in healthcare stocks such as Medtronic (NYSE: MDT) and Eli Lilly (NYSE: LLY). One is a high-yield value play, and the other is more growth-oriented. Here's a primer on each one.

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Medtronic is turning things around

Medtronic is one of the world's largest medical device makers. The stock has a historically high 3.3% yield backed by a dividend that has been increased for 49 consecutive years, which is just one year shy of Dividend King status. The stock's price-to-sales and price-to-earnings ratios are both below their five-year averages. It should interest both dividend investors and value investors.

But why is Medtronic so cheap? The answer is that, over time, the medical device maker's business got bloated, and growth slowed. That's not uncommon, and management got to work on a fix, refocusing on its highest growth and most profitable businesses and exiting less desirable divisions. The heavy lifting has been done, and it looks like Medtronic has turned a corner.

Wall Street still doesn't give the company any credit, but you may want to jump in while the stock still appears to be on sale. Notably, fiscal 2026 saw the highest sales growth in a decade at 8.4%. But the first quarter of fiscal 2027 was even better, coming in with sales growth of nearly 14%. New products, including the Hugo surgical robot, are helping drive the top line. If inflation has you worried, this out-of-favor healthcare stock could be a great pick if you have a value and/or income focus.

Eli Lilly is tapped into a massive growth market

Eli Lilly is at the other extreme on the valuation front. While its P/S and P/E ratios are below their five-year averages, they are both high on an absolute basis. The stock's 0.6% dividend yield is even lower than the miserly 1% you'd get from the S&P 500 index (SNPINDEX: ^GSPC). However, Eli Lilly is the leader in the GLP-1 weight-loss space. Growth investors may want to dig in.

GLP-1 drugs are relatively new, and demand has been huge. At this point, the company's weight-loss drugs account for roughly two-thirds of its sales. That's a risk, noting that drugs have time-limited patent protection. But the weight-loss market is likely to continue expanding as pills become the dominant delivery method. So the GLP-1 story probably hasn't fully played out yet.

That said, the long-term appeal here is that Eli Lilly is using the cash it is generating from its weight-loss drugs to broaden its drug pipeline. Acquisitions have expanded the pharmaceutical giant into new treatment spaces, positioning it well for post-GLP-1 growth. This is a company that's hitting on all cylinders right now and using that success as the engine block for the future. Inflation is unlikely to slow Eli Lilly down.

Consumers will pay to be healthy

Inflation is a problem, and it will impact many industries. Historically, healthcare has been resilient to inflation because medical care isn't really a discretionary item. For investors with a value or income bias, Medtronic is probably worth considering while Wall Street continues to ignore the increasingly obvious success of its turnaround. Eli Lilly is a growth-oriented story, but one that increasingly includes opportunities beyond GLP-1 weight-loss drugs.

Reuben Gregg Brewer has positions in Medtronic. The Motley Fool has positions in and recommends Eli Lilly and Medtronic. The Motley Fool has a disclosure policy.