Here are dozens of “cheap” stocks that may be ready to give better results when US prices start to rise

As the market continues to think about the extent of rate hikes in 2022, spring will today̵[ads1]7;s conversation provides ideas about which stocks perform best when prices rise.

Lori Calvasina, RBC’s head of US equities strategy, has referred clients to this chart which shows which sectors have seen a close correlation with movements in 10-year interest rates in the period after the financial crisis.

As the chart above shows, during interest rate increases in the early and late 1990s and 2018, growth exceeded value, while the latter led during the tightening before the financial crisis. Downsizing in 2014 saw choppy trading.

“Values ​​outperformed interest rates before the mid-1990s tightening, shortly before the Tech Bubble tightening, before the tightening financial crisis, before the 2014 downturn and before the 2018 increases,” the strategist said in a note to customers.

The value stocks that gave better results were largely finance, energy, materials and industry, but Calvasina said that investors should only look at sectors. She pointed to the chart below, first published in December, which shows how the cheapest stocks in Russell 1000 tend to outperform the most expensive stocks when 10-year government interest rates rise.

“Since 2003, we have not seen a sustained long period of 10-year yields increasing. But the rise in early 2022 (to ~ 1.77% as of January 7) has shaken the stock markets,” said Calvasina.

From 6 January, the list of most expensive shares will continue to be dominated by secular growth and technology, while finance and energy will dominate the cheapest shares.
Here are more than a dozen cheap Russell 1000 shares based on futures price / earnings, also considered to be surpassed by RBC:

The fuss

Small businesses say inflation is their biggest problem for the first time since 1981 in the latest sentiment survey. Speeches by Cleveland Fed President Loretta Mester, Kansas City Fed President Esther George and St. Louis Fed President James Bullard are in front.

Following a stock trading controversy, Richard Clarida, deputy chairman of the Fed, said on Monday that he would retire on January 14, two weeks before his term was due to end.

Pfizer PFE,
+0.93%
CEO Albert Bourla said that the pharmaceutical company is working on a hybrid vaccine to cover current variants and omicron, which will be ready for use by March. And China has locked in a third city due to the spread of COVID-19, with 20 million people now affected.

In deal news, Aptiv APTV,
-2.60%
acquires software group Wind River from TPG Capital in a $ 4.3 billion cash deal.

Danaher DHR,
+2.49%
the shares climb after the life-science company said that revenues in the fourth quarter will beat its own guidance.

The markets

US stock futures ES00,
+0.27%

YM00,
+0.15%

NQ00,
+0.39%
rises after Monday’s roller coaster session. Oil prices CL00,
+1.56%
rises and the yield on the 10-year government bond TY00,
+0.09%
is down 2 basis points to 1.756%.

Top tickers

Here are the most active stock market markers on MarketWatch, from kl. 06.00 Eastern.

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