Goldman strategist names two sectors with 'incredibly cheap' stocks after Fed rate hike

Published Sun, Mar 20 20227:55 PM EDT

Lucy Handley @in/lucy-handley-b2b0a61a/@lucyhandley

One of Goldman Sachs ' top strategists has named two sectors that are "incredibly cheap" right now, including one which she says can provide a "lovely hedge" to rising oil prices and inflation. Sharon Bell, Goldman's managing director and senior European equity strategist, said energy and banking stocks are trading cheap, after the U.S. Federal Reserve raised interest rates by 0.25% on Wednesday, its first hike in more than three years. Asked by CNBC's Geoff Cutmore about whether she favors sectors such as financial , energy and autos in light of the rate hike, she said: "Some of those sectors that you mentioned are still incredibly cheap on a longer-term historical basis. Energy, banks, for example, were incredibly unloved sectors through most of the last decade, really. People never wanted to touch these types of company, they were seen as old economy." Bell, who spoke to Cutmore on CNBC's "Squawk Box" on Thursday, added: "In an environment with higher interest rates, in an environment with higher energy prices as well for the energy stocks, actually they look much better positioned." Asked about the impact of the hike on tech stocks, Bell said valuations had come down a lot since the tech sector had been sold off and the sector is "quite resilient." "They don't really rely on, say, energy costs, etc. For them, their margins are already quite high and often reasonably stable. So actually, an environment of higher inflation driven by energy costs or other commodity prices, and slightly weaker growth — where these are growth companies — isn't that bad for tech companies," she said. Bell added the caveat that higher interest rates could hit tech companies' valuations. Bank of America has also said the hike should benefit the financial sector , and picked Citizens Financial Group and East West Bancorp , saying they could beat their price target. Also on BofA's list were Wells Fargo and SVB Financial Group . The Fed committee sees six more rate hikes this year, three more in 2023, and none in 2024, it said Wednesday. — CNBC's Jeff Cox and Maggie Fitzgerald contributed to this report.

Jin Lee | Bloomberg | Getty Images

One of Goldman Sachs' top strategists has named two sectors that are "incredibly cheap" right now, including one which she says can provide a "lovely hedge" to rising oil prices and inflation.