Bond yields have recently increased, raising concerns about their impact on the equities market. Jefferies, an investment firm, has released a list of small and mid-cap stocks that it believes are well-positioned to navigate these challenges. Among the top picks are Citizens Financial Group, Okta, and McCormick & Company.
Steven DeSanctis, a small and mid-cap strategist at Jefferies, noted that while higher interest rates have historically been less favorable for small caps, current balance sheets are stronger than in the past. The firm screened for stocks with low volatility and attractive valuations to help investors weather difficult market conditions.
McCormick & Company, known for its Old Bay seasoning, is expected to benefit from its exposure to faster-growing consumer segments and emerging markets, despite a 20% decline in its shares this year due to concerns over a proposed merger with Unilever.
Okta, a security platform, is favored for its strong demand and recent improvements in revenue retention, while Citizens Financial Group is highlighted for its above-peer earnings growth and ongoing initiatives that should drive profitability. Jefferies has set a $90 price target for Citizens, suggesting a 28% upside from its recent closing price