3 Stocks That Could Benefit if the Fed Raises Rates Again

AI-generated source summary

The analysis focuses on three stocks that are considered defensive plays in an environment where the Federal Reserve might raise interest rates. Ollie's Bargain Outlet (OLLI) is highlighted as a closeout retailer that is misunderstood by the market and often lumped in with dollar stores. Its business model of selling opportunistic buys at quality prices provides utility to consumers, helping it gain and sustain market share. As inflation hurts consumers, they are likely to be pushed towards Ollie's, supporting its cash flow. The stock is expected to experience less volatility and downside during market downturns. Casey's General Stores (CASY) is presented as a traditional retailer with a strong moat, expanding through acquisitions and consolidation in a fragmented market. Its focus on rural locations reduces competition, and its high-margin inside sales and prepared foods contribute to a healthy balance sheet, allowing for self-funded growth. The company is growing above pace, widening margins, and converting cash flow into capital returns, with share counts decreasing. The TJX Companies (TJX) is identified as the largest off-price retailer by market cap and sales volume, consistently taking market share from major retailers due to consumer headwinds. Its historical performance shows a strong upward trend, suggesting resilience and potential for continued growth. The analysis suggests that in a rising rate environment, these stocks offer a more stable investment, with potential for capital return and less downside risk compared to the broader market.

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