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What Stocks to Buy Even as Rates Rise

Tracey Ryniec
Updated
Don't let rising interest rates spook you out of the stock market. Here are some long-term plays investors should consider in this volatile environment.

  • (0:20) - The Impact Of Rising Interest Rates

  • (2:30) - Is The Housing Market Slowing Down?

  • (12:45) - Is It Time To Invest In The Beaten Down Stocks?

  • (16:30) - Should You Be Concerned About A Company's Debt?

  • (19:10) - Where Should You Be Watching With Interest Rates Rising?

  • (23:30) - Episode Roundup: PHM, KBH, LEN, NFLX, BABA, CMA, FRC

  •             Podcast@Zacks.com

Welcome to Episode #151 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

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In this episode, Tracey is joined by Zacks Chief Equity Strategist, John Blank, to discuss how rising rates will affect key parts of the economy, especially housing, and where investors have some buying opportunities.

Thirty-year mortgage rates have already jumped to 7-year highs, at 5%. That’s enough to shock most home buyers as they’ve been at multi-decade lows for so long, many expected them to just always be there.

But will it impact the home buying trends we’ve been seeing since the financial crisis?

Housing starts have not yet returned to the pre-Great Recession years of between 1.6 million and 2 million starts. For the last 3 years, they’ve been averaging just 1.3 million even with the strong job market.

Why not?

Could this be a new paradigm in housing?

Investing Opportunities for Stock Investors

1.       Pulte PHM, one of the nation’s largest home builders, is now dirt cheap. It’s trading with a forward P/E of just 6.5 even though it keeps hitting new lows. Time to stock up?

2.       KB Home KBH, another large home builder, is also really cheap. Shares have fallen over 30% year-to-date. It has a forward P/E of just 11. Are the rate worries overdone?

3.       Comerica CMA is one of the top regional banks. Headquartered in Texas, it’s at the epicenter of one of the hottest state economies. Then why are shares still down 3% year-to-date?

4.       Alibaba BABA has fallen 18% year-to-date on fears about a trade war between China and the US. Are the Chinese stocks cheap enough to jump in now?

Additionally, some companies could face difficulties if they have a lot of debt and the interest rates continue to rise. Their debt becomes more expensive.

Should investors be wary of a company like Netflix NFLX which has a lot of debt?

Find out the answers these questions and more on this week’s podcast.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

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Comerica Incorporated (CMA) : Free Stock Analysis Report
 
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
PulteGroup, Inc. (PHM) : Free Stock Analysis Report
 
KB Home (KBH) : Free Stock Analysis Report
 
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Zacks Investment Research