These stocks consistently beat the market when rates rise. Analysts say buy them now

Published Wed, Mar 24 202110:45 AM EDTUpdated Wed, Mar 24 202112:49 PM EDT

Rising interest rates are spooking investors these days, but if history is any guide, there are plenty of stocks that are consistent winners during periods of rising bond yields. Many of these names are well-liked by Wall Street analysts today. The major averages, especially the technology-heavy Nasdaq Composite, have been pressured by rising bond yields in 2021. The 10-year Treasury yield touched a 14-month high last week, raising concerns about valuations on growth and tech stocks. The market has been basically stuck in place during the latest rate spike. But history shows some stocks stand out during periods of sharp jumps in rates. Outperformers when interest rates rise include banks and other financial stocks, like Goldman Sachs , and retailers that are linked to a recovering economy, such as Nike . Cyclical technology names, including Micron Technology , also fare well as yields increase. CNBC Pro combed through the returns of all S & P 500 stocks during the last five significant spikes in the 10-year Treasury yield. These five periods of a sharp move in rates occurred between 2003 and 2006, 2008 and 2009, 2012 and 2013, 2016 and 2018, and 2020 through now. Bank of America found that the S & P 500 itself does pretty well during these periods of rising rates , gaining on average 13%. CNBC's list contains stocks that beat the benchmark's gain during each of those five periods of rising rates. After we found the stocks that beat the market every time, we looked for the names that are well-loved by analysts on Wall Street today. The stocks' average gains during those rising interest rate periods are listed below, along with the percentage of analysts with buy ratings right now. Bank love During the climb in bond yields this year, bank stocks — which benefit from higher interest rates — have outperformed, following historic trends. Goldman Sachs , Morgan Stanley, JPMorgan and Raymond James all beat the S & P 500 during the most recent periods of rising rates. Goldman and Morgan Stanley returned an average of 75.5% and 77.8%, respectively, during the last five periods of rising rates. Raymond James notched an average return of 68.1% and JPMorgan gained 54.7% on average. This year is no exception. Shares of the four stocks are all up north of 15% in 2021. Banks benefit from higher interest rates as their net interest margin — that is, the difference between what they pay on deposits and earn on loans — increases. "There was a generally optimistic tone vis a vis the macro backdrop and the pace/prospects for a strengthening U.S. economic recovery into the second half of 2021," Credit Suisse research analyst Susan Roth Katzke told clients. "That optimism is most clearly evident in the strength of the capital markets and the steepening yield curve." Higher rates also allow financial companies to charge more for services and make more on their various holdings. Further, increased bond market activity helps the trading side for those with that business. Goldman CEO David Solomon said the economic recovery is expected to be quite robust and the capital markets are "extremely healthy" at the Credit Suisse Financial Services Forum in February . More than 75% of analysts who cover Goldman recommend buying the stock, according to FactSet. Nearly 78% of the analysts who cover Morgan Stanley and nearly 55% of the analysts who cover JPMorgan have a buy rating. More than 68% of the analysts who cover Raymond James have a buy rating on the financial stock. Reopening trade Other names that have fared well during the last five stints of rising rates are retailers like Nike and VF Corp., as higher rates usually signify accelerating economic activity, including consumer spending. Nike returned an average of nearly 46% and VF Corp. gained an average of nearly 54% during the periods of rising rates. After a challenging year due to the pandemic, retailers are finally bouncing back amid the vaccine rollout, easing of Covid-19 lockdowns and deployment of more stimulus aid. UBS recently told clients that the reopening trade has not fully played out, especially in retail stocks. "Consumers' increasing willingness to spend, combined with a high ability to spend, makes for a potent sales growth environment," UBS retail analyst Jay Sole told clients. Plus, JPMorgan noted on Tuesday that credit card spending is up 23.9% year over year as the direct payments from the $1.9 trillion aid package hits Americans' bank accounts. Although the global health crisis still leaves an overhang of uncertainty, Nike said last week it anticipates lockdowns will start to ease in Europe in April, and delivery windows will slowly improve in North America through the remainder of the year VF Corp. — which owns brands The North Face and Supreme — is also expected to benefit from the pickup in consumer spending. Analysts said buying should ramp up as the weather continues to improve. Nearly 80% of the analysts who cover Nike have a buy rating and 60% of the analysts who cover VF Corp. have a buy rating, according to FactSet. Cyclical tech Positive vaccine developments in November did what the pandemic itself could not do, which is spur tech underperformance. The technology sector has trailed the S & P 500 since then, creating a shift from value to growth. Rising interest rates have been weighing on technology stocks disproportionately as the group heavily relies on being able to borrow money cheaply to invest in growth. However, consistent with the broader market narrative of renewed cyclical leadership, the more economically sensitive parts of technology have rallied. A handful of technology-focused stocks that are tied to the economic cycle, like Micron and Corning, outperform during stretches of rising rates. Semiconductors are a key pocket of the technology sector that is cyclical. Names like Micron and Lam Research outperform when interest rates rise. On average, Micron gained nearly 170% during the last five periods of rising rates. Lam Research added more than 83% on average. Goldman Sachs told clients that a key reason to stay bullish on the semiconductor industry is because it believes "it's still early in the cyclical upturn" for chips. More than 82% of analysts have a buy rating on Micron and 76% of analysts have a buy rating on Lam Research. Other tech tied to the economy that do well during periods of rising rates included Corning and Autodesk , along with Motorola Solutions and Agilent Technologies . Autodesk makes software for designing things and could be in demand as construction increases in the economic comeback. "We believe [Autodesk] is well-positioned to benefit as the global economy restarts. Furthermore, we expect to see regular, ongoing price increases now that the subscription model transition is complete," Mizuho Securities told clients. Other stocks outside the technology sector that are cyclical also made CNBC's list. Eastman Chemical , Parker-Hannifin , FedEx and Union Pacific are all names with businesses that generally follow the economic cycle of expansion or downturn. Eastman Chemical gained more than 62% on average during the last periods of rising rates. Parker-Hannifin and FedEx returned more than 58% and 53% on average and Union Pacific gained nearly 44% on average during the last five periods of rate spikes. Other names like health-care giant Cigna , Copart and Ametek also made CNBC's list. — with reporting from CNBC's Michael Bloom.

Michael Nagle | Bloomberg | Getty Images

The major averages, especially the technology-heavy Nasdaq Composite, have been pressured by rising bond yields in 2021. The 10-year Treasury yield touched a 14-month high last week, raising concerns about valuations on growth and tech stocks.

The market has been basically stuck in place during the latest rate spike.

But history shows some stocks stand out during periods of sharp jumps in rates.

Outperformers when interest rates rise include banks and other financial stocks, like Goldman Sachs, and retailers that are linked to a recovering economy, such as Nike. Cyclical technology names, including Micron Technology, also fare well as yields increase.