Release of the new James Bond film No Time to Die has prompted me to re-watch the Connery classics. In Diamonds Are Forever (1971), the scene in which 007 gets pummeled by Bambi and Thumper made me think of how investors are currently caught between the twin assailants of inflation and rising bond yields.

However, as I explain below, corporate earnings growth remains strong. Despite stirring inflation and bond market tumult, this is no time to dump stocks.

The major U.S. stock market indices closed Monday essentially flat, as the one-two punch of worsening inflation and rising bond yields fueled a risk-off sentiment. The indices fell as follows: The Dow Jones Industrial Average -12.86 (-0.04%); the S&P 500 -0.05 (-0.00%); the tech-heavy NASDAQ -7.11 (-0.04%); and the small-cap Russell 2000 -10.84 (-0.45%).

In pre-market futures contracts Tuesday, stocks were little changed. The yield on the benchmark 10-year U.S. Treasury note has risen beyond 1.60%, its highest level since October 27, amid rising inflation and imminent Federal Reserve tapering. When rates are on the rise, momentum stocks (notably tech shares) tend to take it on the chin, because the value of future earnings are diminished.

Read This Story: Inflation: The $64,000 Question

Wall Street is starting to worry that inflation is even worse than it appears and the Fed is getting hawkish too late in the game. The concern is that the Fed may have to accelerate its plans for tapering and, eventually, hiking the fed funds rate. But a major bright spot for stock investors is corporate earnings growth.

Earnings Galore…

As of this writing, with more than 92% of S&P 500 companies reporting actual results for Q3 2021, 81% of S&P 500 companies have reported a positive earnings per share (EPS) surprise and 75% have reported a positive revenue surprise. For Q3 2021, the blended year-over-year EPS growth rate for the S&P 500 is 39.1% (see chart).

Some analysts are sounding the alarm about equity valuations. Stocks are indeed pricey. The forward 12-month price-to-earnings (P/E) ratio is 21.2, which is above the five-year average of 18.4 and above the 10-year average of 16.5.

But earnings projections are solid. For Q4 2021, analysts are projecting EPS growth of 20.9% and revenue growth of 12.3%. For calendar year (CY) 2021, analysts are projecting earnings growth of 44.7% and revenue growth of 15.6%.

That said, projections start to fall as we go further into the calendar. For CY 2022, analysts are projecting earnings growth of 8.5% and revenue growth of 7.0%. Earnings growth calculations next year won’t have the benefit of the comparatively low baseline that resulted from the pandemic.

But the post-COVID world of the future will herald many outsized growth opportunities for well-positioned companies. Demand for collaborative work technologies and cloud computing will remain robust.

Building and construction firms, as well as commodities producers, will get a multi-year boost from greater infrastructure spending. President Biden signed the $1.2 trillion infrastructure bill Monday, ensuring truckloads of federal largesse for companies involved in public works.

Bullishness is the dominant mood on Wall Street, albeit with an undercurrent of anxiety about inflation and the Fed. Overall, there are 10,650 analyst ratings on stocks in the S&P 500. Among these 10,650 ratings, 56.4% are Buy, 37.4% are Hold, and 6.2% are Sell.

With consumers sitting on vast household savings and COVID waning, we could very well witness a “Santa Claus rally” this holiday season. However, next year, if inflation continues to come in hotter-than-expected and the Fed tightens sooner, stocks could take a hit. We’re unlikely to see a correction in Q4, but 2022 appears increasingly fraught with danger.

Maybe you’re looking for an investment opportunity that rises above the risks I’ve just described. Consider marijuana.

That’s right…marijuana. Why else would Big Tobacco rush to make massive investments in fledgling pot companies? As tobacco consumption plummets, the popularity of marijuana is soaring. For our latest report on the best investment opportunities in the booming cannabis sector, click here.

John Persinos is the editorial director of Investing Daily. He also writes the twice-weekly e-letter, Marijuana Investing Daily.