Jump to content

Companies Most Like to Benefit From Rising Rates


Deepdive
 Share

Recommended Posts

Leveraged financials, some insurance, any stock with good pricing power, but with a caveat. It's large, unexpected swings in inflation that can wreck havoc with this or any business that has debt or liabilities. Liabilities are priced by people which embed their expectations into them. Fast changes are not usually assumed. I'd read footnotes about their expectations if you're worried about this. Sometimes I think a government monopoly or duopoly may be good as long as a return over inflation is guaranteed and if the measuring stick benchmark is honest. Also companies that have just finished a large wave of capital investment, naturally inflation makes new capex more expensive so if you've already done it, that's a benefit. Fast growing companies that far exceed the rate of inflation...

 

Link to comment
Share on other sites

Your question implies that you are looking for confirming evidence to feed your confirmation bias. Better ask in what type of environment you don`t want to own any financials and how likely it is that this will happen over the next 3-5 years.

Link to comment
Share on other sites

One of the standard answers is the paycheck processors, like ADP and Paychex.  They have a float that earns short term deposit rates - usually called something like "interest on funds held for clients."

 

Really any float based business like Banking or Berkshire can benefit, but not all of them will. I would rather own a smart capital allocator like berkshire than a portfolio of life insurance companies if I was trying to position for higher rates.  The Life insurance companies own a bunch of bonds.  berkshire does not.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...