We may be a month away from a Fed rate hike. Here are the stocks that worked last time

Published Tue, Feb 8 20221:32 PM EST

With the Federal Reserve's next policy meeting about a month away, CNBC Pro found stocks that performed well before the last rate hike cycle. The Fed has kept the federal funds rate near zero during the Covid pandemic to help stimulate the economy. But as inflation persists , the Fed has signaled it could soon raise interest rates . Many investors expect the first rate hike announcement to come on March 16 at the conclusion of the Fed's policy meeting. Markets are pricing in five hikes this year. Some on Wall Street see an even more aggressive path ahead, with Bank of America predicting seven rate hikes in 2022. CNBC Pro looked at the winners from the period before the last rate hike cycle began that could be poised to rally this time around. The Fed raised rates multiple times starting in December 2016 after a long stint of no hikes. First, we found the S & P 500 stocks that rose 5% or more in the month before the December 2016 rate hike. Then, we screened for the names that are up at least 5% so far in 2022. Next, we narrowed down the pool to those with a buy rating from at least 50% of Wall Street analysts. Finally, we identified the stocks with at least 10% implied upside to their consensus 12-month price targets. Take a look at the names from our screen. (Source: FactSet. As of Feb. 8, 2022.) Financial stocks and cyclical names performed well in 2016 as the Fed prepared to hike rates. Citigroup gained 8.7%, and Citizens rallied 12.1% in the month before the 2016 hike. Rising interest rates benefit banks in several ways. For instance, banks can charge borrowers more for loans, boosting profitability. Alaska Air Group and Deere were also among the top performers in 2016, gaining 11% and 9.7%, respectively. Energy shares ConocoPhillips and Baker Hughes also popped ahead of the 2016 rate hike. These names are typically thought of as cyclical stocks that are closely linked to the economy and thus perform well when the economy grows. Other stocks to make CNBC Pro's screen include T-Mobile , Charles Schwab and FLEETCOR Technologies .

An employee preps a John Deere & Co. excavator for sale at Martin Equipment in Rock Island, Illinois.

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With the Federal Reserve's next policy meeting about a month away, CNBC Pro found stocks that performed well before the last rate hike cycle.