By Mark Hulbert

This week’s report of lower-than-expected inflation was a reminder that your portfolio shouldn’t only include stocks that thrive in environments of rising consumer prices.

It was in March, five months ago, that I devoted a column to a list of stocks to consider for a declining-inflation environment . It was ridiculed by some at the time, since inflation then was heading seemingly higher. But, in the wake of the latest CPI report earlier this week , and the emerging consensus that inflation has peaked, these stocks seem newly relevant.

Since there have been only a couple trading sessions since this week’s report, we have only early indications of how the stocks mentioned in March are now performing. But since the report, they on average have nearly tripled the return of the benchmark S&P 500 Index /zigman2/quotes/210599714/realtime SPX -0.67% .

For this column I am going through the same process I did in March, producing an updated list of stocks that should do well in a declining-inflation environment.

I’m not predicting that the trailing-12-month inflation rate will fall in each of the next number of months. It’s likely that some individual months will see an uptick. But I think there’s a good chance that inflation will be much lower a year from now than it is today. The inflation-forecasting model from the Cleveland Federal Reserve Bank , which is based on a number of inputs such as Treasury yields, surveys of professional forecasters and inflation swaps, is projecting that CPI inflation over the next 12 months will be 3.3%.

To review how I came up with my March list of stocks that should do well when inflation is receding: I analyzed the historical returns of a number of different stock-picking styles — growth, value, small-cap, large-cap, high momentum and low momentum, to name a few. Only if a particular style consistently reacted in one way when inflation was rising and the opposite way when it was declining did I consider it of potential interest.

Based on data back to 1963, only two such styles emerged: Small-cap and low momentum. Specifically, I found, small-cap stocks tend to outperform the large-caps in declining-inflation environments, and low momentum stocks tend to outperform high momentum stocks. (You will notice that, contrary to a widespread narrative on Wall Street, the growth and value styles didn’t emerge from my tests. That shouldn’t come as a surprise, however, as I argued last month in a column for Barron’s .)

Since not all small-cap low-momentum stocks are good bets, I focused only on those that are currently recommended for purchase by at least two newsletters monitored by my performance-auditing firm. I further narrowed the list to include only those whose market caps are no bigger than the largest in the Russell 2000 index (a standard benchmark for the small-cap sector) and only those that historically have exhibited a tendency to do well when momentum strategies are struggling.

The stocks that survived this winnowing process are listed below, in ascending market cap order.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com .

/zigman2/quotes/210599714/realtime

Add to watchlist SPX

S&P 500 Index

US : S&P US

4,372.54

-29.66 -0.67%

Volume: 0.00

Sept. 21, 2023 9:32a

/zigman2/quotes/200834967/composite

Add to watchlist APOG

Apogee Enterprises Inc.

US : U.S.: Nasdaq

$ 47.64

-0.76 -1.57%

Volume: 1,481

Sept. 21, 2023 9:32a

P/E Ratio

10.65

Dividend Yield

1.98%

Market Cap

$1.07 billion

Rev. per Employee

$291,294

/zigman2/quotes/210293936/composite

Add to watchlist B

Barnes Group Inc.

US : U.S.: NYSE

$ 35.67

-0.29 -0.81%

Volume: 104,128

Sept. 20, 2023 4:00p

P/E Ratio

28.93

Dividend Yield

1.79%

Market Cap

$1.81 billion

Rev. per Employee

$250,589

/zigman2/quotes/202223736/composite

Add to watchlist APAM

Artisan Partners Asset Management Inc.

US : U.S.: NYSE

$ 36.84

-0.49 -1.31%

Volume: 100.00

Sept. 21, 2023 9:31a

P/E Ratio

12.89

Dividend Yield

5.95%

Market Cap

$2.99 billion

Rev. per Employee

$1.76M

/zigman2/quotes/210067261/composite

Add to watchlist GT

Goodyear Tire & Rubber Co.

US : U.S.: Nasdaq

$ 12.71

-0.23 -1.78%

Volume: 49,047

Sept. 21, 2023 9:32a

P/E Ratio

N/A

Dividend Yield

0.00%

Market Cap

$3.52 billion

Rev. per Employee

$276,932

/zigman2/quotes/200637338/composite

Add to watchlist MAN

ManpowerGroup

US : U.S.: NYSE

$ 73.81

-0.50 -0.67%

Volume: 100.00

Sept. 21, 2023 9:30a

P/E Ratio

12.66

Dividend Yield

3.96%

Market Cap

$3.69 billion

Rev. per Employee

$621,958

/zigman2/quotes/201894804/composite

Add to watchlist AL

Air Lease Corp.

US : U.S.: NYSE

$ 40.07

-0.21 -0.52%

Volume: 800.00

Sept. 21, 2023 9:31a

P/E Ratio

9.43

Dividend Yield

1.99%

Market Cap

$4.47 billion

Rev. per Employee

$15.81M

/zigman2/quotes/202832948/composite

Add to watchlist THO

Thor Industries Inc.

US : U.S.: NYSE

$ 96.46

-0.51 -0.53%

Volume: 100.00

Sept. 21, 2023 9:30a

P/E Ratio

9.30

Dividend Yield

1.86%

Market Cap

$5.11 billion

Rev. per Employee

$381,408

/zigman2/quotes/200714911/composite

Add to watchlist TKR

Timken Co.

US : U.S.: NYSE

$ 72.11

-0.80 -1.10%

Volume: 900.00

Sept. 21, 2023 9:32a

P/E Ratio

12.37

Dividend Yield

1.81%

Market Cap

$5.23 billion

Rev. per Employee

$250,184

/zigman2/quotes/200559252/composite

Add to watchlist OSK

Oshkosh Corp.

US : U.S.: NYSE

$ 97.60

-1.04 -1.05%

Volume: 100.00

Sept. 21, 2023 9:31a

P/E Ratio

16.30

Dividend Yield

1.66%

Market Cap

$6.42 billion

Rev. per Employee

$596,767

/zigman2/quotes/200972303/composite

Add to watchlist ALK

Alaska Air Group Inc.

US : U.S.: NYSE

$ 38.42

-0.19 -0.50%

Volume: 5,847

Sept. 21, 2023 9:31a

P/E Ratio

31.37

Dividend Yield

0.00%

Market Cap

$4.91 billion

Rev. per Employee

$406,023

/zigman2/quotes/209008020/composite

Add to watchlist PII

Polaris Inc.

US : U.S.: NYSE

$ 105.48

-0.73 -0.68%

Volume: 300.00

Sept. 21, 2023 9:31a

P/E Ratio

9.90

Dividend Yield

2.45%

Market Cap

$6.03 billion

Rev. per Employee

$564,259

/zigman2/quotes/208720096/composite

Add to watchlist UNM

Unum Group

US : U.S.: NYSE

$ 49.40

+0.27 +0.55%

Volume: 3,723

Sept. 21, 2023 9:31a

P/E Ratio

6.82

Dividend Yield

2.97%

Market Cap

$9.61 billion

Rev. per Employee

$1.11M

/zigman2/quotes/203847835/composite

Add to watchlist JBL

Jabil Inc.

US : U.S.: NYSE

$ 105.85

-1.48 -1.38%

Volume: 1,525

Sept. 21, 2023 9:32a

P/E Ratio

15.11

Dividend Yield

0.30%

Market Cap

$14.02 billion

Rev. per Employee

$141,096

/zigman2/quotes/200296850/composite

Add to watchlist WHR

Whirlpool Corp.

US : U.S.: NYSE

$ 135.25

-1.10 -0.81%

Volume: 570.00

Sept. 21, 2023 9:30a

P/E Ratio

N/A

Dividend Yield

5.13%

Market Cap

$7.52 billion

Rev. per Employee

$313,934