Inflation remains hot.

In September, U.S. consumer prices spiked 8.2% from a year earlier — a multi-decade high.

The Fed has already raised interest rates multiple times this year to slow that worrisome trend. It’s uncertain how the economy will handle higher interest rates, and stocks are getting sold off as a result.

The S&P 500 is already down roughly 22% in 2022.

But investment mogul and Shark Tank star Kevin O’Leary still believes in holding stocks in a rising interest rate environment.

“Even as rates go up, equities are the place to be because fixed income gets hurt a lot more,” he says in a CNBC interview from earlier this year.

Of course, not all stocks are the same. Mr. Wonderful believes in these kinds of companies during times of rampant inflation.

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Companies with pricing power

Against the current backdrop, O’Leary looks for companies that have the ability to raise prices without too much pushback from consumers.

“Where you want to be in equities, particularly when rates start taking up, is in companies that have pricing power,” O’Leary says. “In other words, their goods and services are necessities for people so they are willing to take a small increase in price, sometimes a larger one, as rates go up.”

But where would you find businesses with pricing power?

“Right now healthcare looks really good and also consumer cyclicals look very good,” O’Leary suggests.

He adds that investors should pay attention to companies that produce things people still need during times of inflation, especially “what they eat” and “what they drive.”

Focus on energy

O’Leary singles out the energy sector as a particularly prudent place to park some money during periods of high inflation.