9 Stocks Offering Up to 46% Upside Despite a Hawkish Fed

The Fed surprised markets by taking a more hawkish stance than expected, and the markets fell.
Some stocks are better positioned to weather higher interest rates for a longer period.
Discover nine opportunities well-positioned to outperform in this environment.

Wall Street ended sharply lower on Wednesday, with selling accelerating into the close. The fell 1.34%, the lost 1.21%, the declined 0.97%, and the dropped 0.74%.

The selloff followed the latest , which delivered an unwelcome surprise for investors. While the Federal Reserve left its benchmark interest rate unchanged at 3.50%–3.75% during the first meeting chaired by Kevin Warsh, the broader message from policymakers was far less reassuring for those hoping for a shift toward monetary easing.

The June Dot Plot Shatters the Rate-Cut Narrative

The shift toward a tighter policy stance became clear in the Fed’s updated dot plot. Nine of the 18 policymakers now expect at least one rate hike by the end of 2026, including six who anticipate two quarter-point increases. The median projection for the federal funds rate at year-end rose to 3.8%, up from 3.4% in March. At the same time, the Fed increased its inflation outlook, with the PCE index now expected to reach 3.6% by the end of 2026 versus 2.7% in the previous forecast.

The change is significant. Just three months ago, no Fed official projected a rate increase in 2026. Futures markets reacted quickly, with traders now pricing in a first quarter-point hike by October and assigning a high probability to another increase by early 2027.

Kevin Warsh acknowledged that inflation remains at its highest level in more than three years, driven largely by the energy shock linked to the Middle East conflict. At the same time, he noted that core inflation, which excludes food and energy, stood at a more moderate 2.9% in May and that price pressures have yet to spread broadly across the economy.

The decision to leave rates unchanged was unanimous, reflecting the Fed’s view that part of the inflation surge stems from supply-side disruptions. Still, the broader message was unmistakable: the rate-cut narrative that markets had embraced since the start of the year has largely been pushed aside.

For investors, this environment creates a tougher backdrop for high-multiple growth stocks, whose valuations depend heavily on future cash flows. By contrast, companies that can grow earnings, generate strong cash flow, and maintain solid balance sheets without relying heavily on external financing may be better positioned to navigate a higher-rate environment.

These 9 U.S. stocks have fundamentals well-suited to rising interest rates

To identify them, we turned to the Investing.com screener, combining criteria for attractive valuations and fundamental strength specifically tailored to the current environment:

Market capitalization exceeding $10 billion —to target companies with the scale and resources needed to weather a monetary tightening cycle

Upside potential of more than 25% according to InvestingProFair Value, which uses several recognized valuation models, as overvalued stocks are particularly vulnerable in a high-interest-rate environment

Upside potential of more than 25% based on the average analyst target

12-month EPS growth exceeding 10% —to avoid value traps and target only companies whose earnings are actually growing despite pressure on financing costs

Free Cash Flow Yield above 5% —a sign of financial independence in an environment where access to credit is becoming more expensive

InvestingPro Overall Financial Health Score above 3

InvestingPro Cash Flow Health Score above 3 — this dual filter ensures that the selected companies have strong balance sheets and healthy cash flow generation

This research has allowed us to identify 9 opportunities:

Specifically, these nine US stocks, selected for their ability to perform in a higher-for-longer interest-rate environment, offer upside potential of 27.1% to 46.3% based on InvestingPro Fair Value estimates, while posting EPS growth ranging from 16.4% to 690.1% over the past twelve months.

Among these stocks are:

EQT: EQT Corporation (NYSE:) is the largest natural gas producer in the United States, with a strong presence in the Appalachian Basin. In a higher-rate environment, energy producers can benefit from commodity-driven earnings that are less dependent on the economic cycle. In Q1 2026, EQT generated more than $1.8 billion in free cash flow, while revenue climbed 57% year over year to $3.38 billion. Demand from LNG exports and power-hungry data centers remains a key long-term growth driver, although natural gas price volatility remains an important risk.

FUTU: Futu Holdings Ltd (NASDAQ:) operates the Futubull and Moomoo trading platforms and benefits from a business model that is well-positioned for higher interest rates. A significant portion of its revenue comes from interest income, helping support profitability when rates remain elevated. The company delivered strong earnings growth and record trading activity in late 2025, with net income rising sharply year over year. Key risks include regulatory developments, US-China relations, and the company’s growing exposure to cryptocurrency-related activities.

However, many other stocks on this list offer more attractive investment profiles.

 

Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of any assets and does not constitute an offer, solicitation, recommendation, or advice to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky; therefore, any investment decision and the associated risk are the sole responsibility of the investor. Additionally, we do not provide any investment advisory services.