Stocks like ConocoPhillips and Wells Fargo should be the big winners as rates rise, history shows

Published Tue, Mar 22 202212:44 PM EDT

As rates surge to multi-year highs, investors could look to history for stock picks that outperform during similar increases in the past. The 10-year Treasury yield has jumped a half percentage point so far in March. And investors expect rates will climb even higher after Federal Reserve Chief Jerome Powell signaled on Monday a "willingness to move very aggressively" against inflationary pressures. On Tuesday morning, the 10-year Treasury jumped to 2.351% , or its highest point since May 2019. Higher interest rates can hurt stock prices, but CNBC Pro screened several stocks that made gains during the last five biggest monthly increases to the benchmark 10-year Treasury yield. Those time periods include January 2018, February 2021, March 2021, January 2022, September 2021. All stocks that surfaced were consistent winners. They increased in value every time that interest rates shot higher during those months. They also had high average returns of 5% or more, according to FactSet data. What's more, Wall Street likes these stocks right now. The companies are rated buy by a majority of analysts, and those analysts see a consensus gain of 10% or greater in the stocks over the next 12 months. ConocoPhillips ' stock price soared 16.7% on average during the last five monthly increases to the 10-year Treasury. The energy play has a buy rating by 70% of analysts, who believe the stock has 11.2% upside. Energy was the worst-performing sector in seven of the past 10 years , but sanctions against Russian oil has benefited oil and gas companies. Year to date, ConocoPhillips' stock price soared 42%. Several financial stocks surfaced on the screen, including Wells Fargo , Fifth Third Bancorp , and Hartford Financial Services Group . On average, Wells Fargo spiked 10.2% during the last five increases to the 10-year benchmark. The bank stock has an upside of 22.4% from where it's currently trading. The financial sector typically generates higher revenues when interest rates rise because they can charge more for loans and savings products. On average, payments firm Mastercard gained 6.4%. Analysts believe the stock has 25.4% upside. Mastercard has underperformed the major averages this year, having declined 3.8% year to date.

ConocoPhillips operation in Bohai Bay, China

Source: ConocoPhillips

As rates surge to multi-year highs, investors could look to history for stock picks that outperform during similar increases in the past.