The United States Federal Reserve has pursued a dovish rate policy over the past decade. However, the pressure of high inflation has put policymakers in a very difficult position. Now, the Fed has pledged to chalk up a series of rate hikes before the end of 2022. Investors should be prepared for this new reality. Today, I want to look at two U.S. stocks that are a solid target in this climate.
Allianceberstein Holdings (NYSE:AB) is the first U.S. stock I’d look to target in the first half of April. This Nashville-based company is a top investment manager. Alliancebernstein boasts nearly $780 billion in total assets at the time of this writing. This means that it will be able to take advantage of better savings rates in a tightening cycle. Better yet, shares of this stock currently possess a favourable price-to-earnings ratio of 12.
Discover Financial (NYSE:DFS) is the second U.S. stock I’d target as the top central bank aims to hike interest rates. This Illinois-based company provides digital banking products and payments services in the United States. Shares of this stock have dropped 5.6% in the year-over-year period as of mid-afternoon trading on April 8.
This company can take advantage of rising interest rates by hiking the rate it charges on outstanding credit card balances. Credit card debt has erupted in recent years, which means that Discover’s profitability has the potential to soar in the months ahead.
