Interest rate hikes continue, but Wall Street analysts are still finding stocks to invest in. This week, analysts said that several companies are well-positioned to benefit from rate increases. CNBC Pro has combed top Wall Street research in order to identify stocks that will benefit from high interest rates. These include Bank of America and Toll Brothers, Bunge, HealthEquity, Costco, and Bunge. HealthEquity According to Baird’s Mark Marcon, “we view HQY in a high interest rate environment as an attractive investment that can function as a diversifier of portfolios.” He wrote that the firm upgraded the fintech health savings company from neutral to outperform in part due to a “higher interest rate for longer” environment. HealthEquity’s cash-based health savings accounts portfolio has been hurt in recent years by a downward trend in yields. However, Marcon says that as rates increase it will be a positive for HealthEquity. Marcon cited several other factors in his upgrade, including strong earnings, acquisitions and management’s ability to execute. Marcon believes that the HSA market will continue to grow and HealthEquity, as a leading player in this space, will gain share. “Due these factors, HQY stock performance over the last few years has been muted despite underlying positive results in the core HSA businesses, creating what we think is an attractive buy opportunity for a multiple-year compounder,” he continued. The shares are up more than 18% in the past year. Goldman Sachs recently said that Bunge, the agricultural commodities company, is also a beneficiary of interest rates. Goldman Sachs said Bunge could benefit from rising interest rates for middle market companies. Analyst Adam Samuelson stated that BG has a cost advantage over smaller and local competitors in a rising rate environment. This allows for additional bolt-on M & A or opportunistic investment of working capital. He added that the company’s execution was strong, and vegetable oil demand is on the rise. He wrote that the stock is still very attractive, even with these “cyclical headwinds”. Samuelson says that despite the 10.5% increase in shares this year, there is still plenty of room for growth. He said that “against this backdrop, the balance sheet flexibility and company-specific opportunities for growth remain significant.” Buck Horne, Raymond James’ analyst said that Toll Brothers is not worried about high interest rates. Toll Brothers is still a top choice for the firm, following its robust earnings report from late August. He wrote that despite a steady rise in mortgage rates above the 7% mark, the demand for new homes has remained strong as the lock-in effects from the existing housing market have grown even stronger. Horne said that homebuilders have not seen a slowdown in the number of affluent customers purchasing homes. He said that TOL is well positioned to take advantage of this trend, given its unique modern home designs and best-in class land locations. Toll said that the higher rates, combined with a very limited inventory left homebuilders, and Toll specifically, in a very strong position. Horne wrote that TOL is the best risk/reward option in the homebuilding industry in this environment of rising rates because it caters to a very resilient group of buyers. Toll shares have risen 48% in the past year. Costco, Evercore ISI – outperform rating. “Our Base Case is $600, which uses 37x CY24 earnings of $16.35, reflecting a solid share gain and positive traffic trends. … COST’s share increase, traffic, possible fee hike, impenetrable financials & net cash in a world of rising rates keeps it in our top 5 portfolio. COST is attractive because of its defensive growth, with the potential for a dual catalyst path that includes a special fee increase and a dividend. These catalysts could be available in late ’23/’24.” HealthEquity – Baird, Outperform Rating “We see HQY as a good investment, especially in a high interest rate environment. It can be used as a portfolio diverter, particularly when interest rates are higher for longer.” … due to these factors, HQY’s stock performance over the last few years has been muted despite underlying positive results in the core HSA (key long-term driver). This creates what we consider an attractive buying opportunity for a multiple-year compounder. Bunge – Goldman Sachs buy rating: “Strong execution boosts cyclical headwinds and capital deployment.” … The cost advantage of BG over smaller & local competitors in a rising rate environment allows for additional bolt-on M & A and opportunistic investment. In this context, the balance sheet flexibility and growth opportunities for companies remain important.” Bank of America- Morgan Stanley, Overweight rating “Commentary on the [the] meeting of the FOMC suggests that it may be necessary for Fed to maintain rates higher longer in order to achieve its 2% inflation target. BAC is the company that benefits most from a longer-term environment, as it has the lowest exposure to CDs with short maturities and receives the greatest benefit from free funds. BAC is the largest beneficiary of higher rates for longer. The benefit of free funding makes up 44% NIM [net interest margin]; NIB deposits are more sticky than CMA and CDs that mature in 1 year make up 4.6% total deposits at 2Q23. Toll Brothers, Raymond James, high buy rating. “Despite the steady rise in mortgage rates beyond the 7% threshold new home demand has remained resilient, as the lock-in effects from the existing home market have grown even stronger. This dynamic plays right into TOL’s wheelhouse, given its best in class land locations, distinctive contemporary home designs & successful operational pivot towards more rapid-delivery spec homes. … We view TOL, which caters to a demographic of buyers who are extraordinarily resilient in a rising rate environment, as the best risk/reward strategy in the homebuilding industry. “