3 Winners Year-To-Date To Weather Aggressive U.S. Interest Rate Hikes

The Federal Reserve concludes its June policy meeting today at 2 PM EST

Increased concerns that it will hike rates more aggressively than already expected, risking recession

Investors seeking compelling returns should consider buying Hess, Kellogg, and AT&T

For tools, data, and content to help you make better investing decisions, try InvestingPro+ .

Market participants have dramatically raised their bets in recent days that the Federal Reserve will hike interest rates even more aggressively than already anticipated to try tame soaring inflation .

Investing.com ’s Fed Rate Monitor Tool , which had been strongly pointing to a 50 basis points (bps) hike at the Fed’s June policy meeting , was now showing a more than 90% probability of a 75 bps move. If confirmed, it would be the biggest Fed rate hike since 1994.

These bets on a more aggressive tightening follow an upside surprise in the May inflation data released late last week, sending shockwaves across the stock market.

The benchmark S&P 500 index is now down 22% from its Jan. 3 record close, surpassing the 20% pullback threshold used to define a bear market.

Meanwhile, the tech-heavy NASDAQ Composite , which slumped into a bear market earlier this year, is approximately 33% below its Nov. 19, 2021, record level and the Dow Jones is roughly 18% off its reported high. S&P 500, NASDAQ, And Dow Chart Taking that into account, we highlight three year-to-date winners set to outperform in the weeks and months ahead as investors brace for aggressive Fed rate hikes and a possible recession . 1. Hess Corporation

Year-To-Date Performance: +62.2%

Market Cap: $37.1 Billion

Hess Corporation (NYSE: HES ) is one of the leading energy companies in the US. Its core business operations involve exploring, producing, and transporting crude oil , natural gas , and natural gas liquids (NGLs).

Its main assets are located primarily in the Bakken shale play in the Williston Basin area of North Dakota. It has also exploration and production operations in the Gulf of Mexico, Libya, Canada, South America, and Southeast Asia.

The New York City-based company has been a standout performer in the booming energy sector this year, reaping the benefits of higher oil and gas prices.

Shares of HES, which are up around 62% in 2022, rose to $131.43 on June 8, a level not seen since May 2008; it ended Tuesday’s session at $120.07. At current valuations, the energy firm has a market cap of $37.1 billion. HES Daily Chart Despite extraordinary year-to-date returns, Hess remains one of the best stocks to hedge against further market turmoil due to its continuous efforts to return more cash to investors in the form of higher dividends and stock buybacks.

The oil-and-gas production company recently raised its quarterly dividend payout by 50% to $0.375 per share. This represents an annualized dividend of $1.50 and a yield of 1.23%.

Hess is poised to continue to benefit from its stellar global operations while taking advantage of strong energy prices and improving demand, which will help drive future profit and sales growth.

Not surprisingly, in an Investing.com survey of 23 analysts, 15 rated HES stock as a ‘buy,’ eight rated it as ‘neutral,’ and none considered it a ‘sell.’ Among those surveyed, the stock had a roughly 14% upside potential with an average 12-month price target of $136.43. HES Consensus Estimates Source: Investing.com

Likewise, according to a number of valuation models, including P/E or P/S multiples or terminal values, the average fair value for HES stock on InvestingPro+ stands at $130.55, a potential 8.7% upside from the current market value. HES Fair Value Estimates Source: InvestingPro+ 2. Kellogg Year-To-Date Performance: +6.1% Market Cap: $23.1 Billion As one of the world’s leading food manufacturing companies , Kellogg (NYSE: K ) is best known for producing snacks, such as crackers, toaster pastries, and potato chips, as well as convenience foods, including cereals, and frozen waffles.Some of its most recognizable brands—which are marketed and sold in over 180 countries—include Frosted Flakes, Froot Loops, Rice Krispies, Pop-Tarts, Cheez-Its, and Pringles. Its portfolio also includes frozen food brands Eggo, and Morningstar Farms.In our view, shares of the Battle Creek, Michigan-based company are well-positioned to extend their march higher in the weeks ahead as investors pile into defensive areas of the consumer staples sector amid the current market rout.Year-to-date, Kellogg shares have gained 6.1%, easily outpacing the comparable returns of the broader market as well as other notable names in the packaged food space, such as Kraft Heinz (NASDAQ: KHC […]

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