These stocks win when the Fed starts hiking rates and Wall Street thinks they could triumph again

Published Fri, Mar 18 20222:25 PM EDT

As the Federal Reserve ushers in its first rate hiking cycle since 2018, there are some clear-cut winners from the past that could take off in the months ahead — and Wall Street seems to agree. After the central bank increased interest rates by 25 basis points on Wednesday to curb rising inflation and indicated that more hikes are to come, CNBC Pro looked at stocks during the last three rate-hiking cycles that offered the greatest annualized returns. Many of the stocks that made the cut are from sectors like industrials, which typically benefit during a growing economy. More importantly, Wall Street likes the picks. These companies have buy ratings greater than 50% and see a consensus 10% upside over the next 12 months. The list includes 15 names across sectors. CNBC Pro weeded out stocks that declined in value during any single period or saw extreme returns that skewed their averages. The hiking periods analyzed occurred between December 2015 and December 2018, June 2004 and June 2006, and June 1999 and May 2000. Here are some of the stocks that made the cut: American Tower Corporation , ranked with the highest average return of 53.2% during the last three cycles. The real estate investment trust's stock saw a more than 98% return during the 1999 to 2000 rate-hike cycle, and its stock is up 6.8% this month. Energy companies like ConocoPhillips also made the list, as did some under-the-radar financial services companies, which generally benefit when rates climb. Utilities companies, which typically pay good dividends but face competition from bonds during rate hikes, rounded out the list along with some technology stocks like Autodesk . Over the last three cycles, Autodesk, which is often linked to the cyclical economy, saw gains of 31.8% on average. The software company also saw the largest return (27.3%) during the most recent cycle. Industrials firm Parker-Hannifin also made the list. The motion-control technology company saw an average return of 10.4% and currently boasts a more than 63% buy rating on the Street. Many retailers also tend to benefit from rate-hiking cycles, as they generally bring strong economic activity. Home Depot , which saw a 12.7% return on average during rate-hiking cycles made the list. The home improvement retailer saw a rush in demand during pandemic lockdowns. The company recently reported strong quarterly earnings but has come under pressure amid supply chain disruptions. Its stock is down 19% since the start of the year, but up nearly 6% this month. Beer, wine, and spirits producer Constellation Brands also made the cut with an average annualized return of 9.4% during rate-hike cycles. Wall Street likes the stock — which has a 64% buy rating. Goldman Sachs recently listed the company among its stock picks with low exposure to Russia as investors look to play the market during the ongoing conflict in Ukraine. Meanwhile, investor Sarat Sethi told CNBC's " Squawk Box " earlier this month that Constellation Brands is among the companies that could raise prices if fuel costs continue to rise. He noted that consumers are also looking to spend as summer approaches and reopenings ramp up.

A Home Depot store in Hyattsville, Maryland, on February 22, 2022.

Stefani Reynolds | AFP | Getty Images

As the Federal Reserve ushers in its first rate hiking cycle since 2018, there are some clear-cut winners from the past that could take off in the months ahead — and Wall Street seems to agree.