Interest rates have soared this year, with the 10-year Treasury yield to 128 basis points to 2.79%, though it peaked at 3.13% May .
With the Fed poised to unleash numerous rate hikes in coming months, you might want to think about stocks that do well when rates climb. Bank of America put together a list of such stocks.
It includes S&P 500 companies and is based on their relative performance sensitivity to changes in the 10-year Treasury yield. The companies must have 10 years of monthly returns, and the analysis goes back to 1972.
The Top Stocks in Order Are ...
1. Marathon Petroleum (MPC), a refining company
2. Qorvo (QRVO), a semiconductor company
3. Live Nation Entertainment (LYV), an entertainment company
4. Las Vegas Sands (LVS), a casino company
5. NXP Semiconductors (NXPI), a Dutch semiconductor company
Morningstar on Marathon
Morningstar analyst Allen Good was impressed with the company’s first-quarter results.
“Marathon Petroleum turned in another strong quarter, with earnings improving to $845 million from a loss of $242 million a year ago on an improved refining market,” he wrote in a commentary.
“The refining market continues to gain strength as margins widen, given strong demand and Russia sanctions-related disruptions to supply. Marathon stands to be a beneficiary, while its large repurchase program sets it apart from peers.”
Good puts fair value for the stock at $87, and it recently traded at $96.44.
Morningstar on Qorvo
"[The company’s latest earnings report] provided investors with a predictably weak forecast for the June quarter in light of soft smartphone demand in China, which should weigh on revenue for the next two quarters,” said Morningstar analyst Brian Colello.
“We still view no-moat Qorvo as fundamentally undervalued and still anticipate healthy 5G radio frequency chip content gains in the years ahead," he said.
"But we would point investors toward narrow-moat Skyworks Solutions (SWKS), because of its better execution over the years and its lower exposure to Chinese smartphone [makers].”
Colello puts fair value for the stock at $169. It recently traded at $108.29.
Morningstar on Live Nation
Morningstar analyst Neil Macker noted strength in the company’s first-quarter earnings report.
“Live Nation’s 2022 focus on returning to pre-pandemic levels appears on track, with over 70 million tickets sold for 2022 shows, 36% above the same point in 2019,” he wrote in a commentary.
And 90% of planned sponsorship for the year is already booked, he said.
“Both the level of demand and supply for live music continue to expand despite limited activity in certain markets,” Macker said.
He puts fair value for the stock at $105. It recently traded at $89.28.
