10 Best Stocks to Buy for a Rising Interest Rate Environment

8. Unum Group (NYSE:UNM)

Number of Hedge Fund Holders: 51

Unum Group (NYSE:UNM) offers employee benefits and workplace protection across the U.S., UK, and Poland. The company bags in insurance premiums and reinvests the cash proceeds into fixed-income bonds, which enables it to earn higher reinvestment yields as rates go up. Its effective asset-liability matching and fixed-income portfolio have positioned it to benefit from higher short-term rates.

Rate hikes also bode well for Unum by easing pressure on its closed blocks of business operations like the LTCI insurance. It was part of Insider Monkey’s list of stocks that recently got upgraded by analysts, after being upgraded from Neutral to Overweight by JPMorgan on November 9.

The company faced a steep earnings selloff during the third quarter of fiscal 2026. Underlying margin compression appears to be structural rather than a temporary hiccup, as per the skeptics. Bears are also reflecting on Unum’s legacy LTC liabilities, earnings fluctuations, and deterioration of its core disability underwriting margins.

BlackRock is the largest institutional stakeholder, as per the Yahoo Finance database, holding 17.99 million shares as of June 30. This amounts to 11.61% of outstanding shares. Other notable institutional investors include Norges Bank and Vanguard Portfolio Management, holding 8.55% and 5.54% of outstanding shares, respectively.

7. PNC Financial Services Group Inc. (NYSE:PNC)

Number of Hedge Fund Holders: 59

PNC Financial Services Group Inc. (NYSE:PNC) primarily benefits from rising interest rates by locking in higher asset yields on its commercial lending products and variable-rate loans. PNC delivered an impressive loan book expansion and net interest income growth during Q3 fiscal 2026, and the stock’s current valuation appears compelling.

With a market capitalization of nearly $92 billion, it trades at a modest trailing earnings multiple of 12.3x, below the 5-year median of 12.8x. Moreover, its forward price-to-earnings multiple of 10.7x indicates an earnings yield of around 9.4%. Management has acknowledged that a steeper yield curve favors the company, as it increases the spread between the longer-term asset returns and short-term funding costs. This boosts profitability for the business across later cycles.

There is some level of investor pessimism regarding PNC’s credit quality, as the company has witnessed an upward trend in its non-performing loans. With a total debt balance of close to $45.3 billion, it carries a high-debt structure, and its Common Equity Tier 1 (CET1) ratio sits just below the 10% internal target.

With 32.17 million shares, BlackRock is the largest institutional investor, owning 8.11% of the outstanding shares.

6. Devon Energy Corp. (NYSE:DVN)

Number of Hedge Fund Holders: 82

Devon Energy Corp. (NYSE:DVN) currently trades at an attractive trailing P/E ratio of 9.9x, valued at a notable discount to the larger peers across the oil and gas exploration and production segment. At a market capitalization of more than $48 billion, its forward earnings multiple stands lower at 7.77, implying earnings to grow by more than 28% over the coming year. It is expected to benefit from rate hikes amid the commodity price correlation, as tighter energy supply would result in higher prices for crude oil and natural gas. However, it is important to keep in mind that Devon Energy operates in a cyclical business and a potential decline in global energy prices could seriously hurt its earnings.

Devon ranked #3 in Insider Monkey’s list of 10 Activist Target Stocks with High Cash and Low Valuation. The company has been urged by activist investors to streamline its portfolio by selling its non-core oil and gas assets. The management has been encouraged to focus on unlocking shareholder value and enhance its capital allocation strategy.

Integration complexities, commodity price fluctuations, and liquidity concerns lie at the center of Devon’s bear case. Topline and cash flow generation capacity are closely tied to natural gas and crude oil market dynamics. Any shift in the US-Iran war situation, OPEC+ policies, or a global economic slowdown could adversely affect margins. This would have significant implications for the company’s payouts and share repurchases.

5. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Holders: 84

Caterpillar Inc. (NYSE:CAT) was one of the names that held up through the last interest rate hiking cycle back in 2022–23. The stock delivered more than a 41% return between February 2022 and July 2023, indicating that historically it has benefited from a rise in short-term rates. The company’s record $78 billion order backlog, following a 96% year-over-year growth, would offer protection in case new orders decline due to rate hikes. Its financial services arm, Caterpillar Financial Services, would also yield higher spreads through repricing of leases, loans and other financing products.

Following the purchase of 1,000 shares by board member James C. Fish Jr. on November 2, for a total consideration of $620,390, Caterpillar made the list of 10 Buy the Dip Stocks Insiders Are Loading Up On After the Recent Market Sell-Off. The purchase increased his reported position in Caterpillar by almost 27%, which now stands at a total of 4,714 common shares.

The stock trades at inflated valuation multiples. The trailing P/E ratio stands at 23.6x, above the forward multiple of 18.8x, which leaves little room for execution error. Additionally, the company faces overcapacity concerns with its ongoing multi-year manufacturing expansion in power generation equipment.