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Here Are the Naughty and Nice Lists of Stocks For Rising Rates

Jefferies created lists of 10 stocks that may benefit from rising rates and 10 that may suffer.
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Now that the Federal Reserve has indicated that it will likely start raising interest rates in March, which stocks should you consider buying, and which should you avoid?

Jefferies created a list of 10 stocks for each side of that equation -- stocks that may benefit from rising rates and stocks that may suffer from rising rates, CNBC reports.

For the list of stocks that may benefit, Jefferies chose non-financial companies with a market capitalization greater than $10 billion that have a strong positive correlation with the 10-year Treasury yield and real yield since 2010.

The roster includes American Airlines  (AAL) - Get American Airlines Group, Inc. Report, Caterpillar  (CAT) - Get Caterpillar Inc. Report, Deere  (DE) - Get Deere & Company Report, ConocoPhillips  (COP) - Get ConocoPhillips Report, FedEx  (FDX) - Get FedEx Corporation Report, General Electric  (GE) - Get General Electric Company Report, General Motors  (GM) - Get General Motors Company Report, Honeywell  (HON) - Get Honeywell International Inc. Report, Marathon Petroleum  (MPC) - Get Marathon Petroleum Corporation Report, and Pioneer Natural Resources  (PXD) - Get Pioneer Natural Resources Company Report.

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For the list of stocks that may suffer, Jefferies used the same criteria, but with the opposite correlation from the positive list. It chose non-financial companies with a market capitalization greater than $10 billion that have a strong negative correlation with the U.S. 10-year bond yield and real yield since 2010.

The roster includes American Tower  (AMT) - Get American Tower Corporation Report, Amgen  (AMGN) - Get Amgen Inc. Report, Chipotle Mexican Grill  (CMG) - Get Chipotle Mexican Grill, Inc. Report, Clorox  (CLX) - Get Clorox Company Report, Colgate-Palmolive  (CL) - Get Colgate-Palmolive Company Report, Eli Lilly  (LLY) - Get Eli Lilly and Company Report, General Mills  (GIS) - Get General Mills, Inc. Report, Hershey  (HSY) - Get Hershey Company Report, PepsiCo  (PEP) - Get PepsiCo, Inc. Report and Zscaler  (ZS) - Get Zscaler, Inc. Report.

As for American Airlines, Morningstar analyst Burkett Huey puts fair value at $19.50, compared to its recent quote of $15.81.

“No-moat-rated American Airlines restored its network to a greater extent than peers during the fourth quarter, but increased fixed-cost utilization has not brought operating margins above zero just yet,” he wrote last week.