By Jacob Sonenshine

Federal Reserve rate cuts have been a casualty of the war with Iran as oil prices rise. Investors should look for stocks that can thrive even if the Fed stays put.

With the price of oil up 61% in 2026, odds of a rate cut have tumbled. On Feb. 24, there was a 94% chance of one rate cut this year; now there's a 3.6% chance of one cut. That makes sense, but it also means that investors need to be wary of rate-sensitive areas, such as tech and home builders, and focus instead on stocks that can benefit from a good-enough economy but that don't bear the risk that higher rates crush their valuations.

22V Research's Dennis DeBusschere screened for companies that sit in that sweet spot. He scoured the S&P 1500 Index for stocks at the higher end of sensitivity to economic data and that are at the lower end of debt cost sensitivity. The former stand to rise the most as those data points show growth. The latter have little debt and can therefore absorb the impact of higher interest rates.

The screen showed several household names, including Marriott International, Royal Caribbean Group, Airbnb, Dave & Buster's Entertainment, Advance Auto Parts, Delta Air Lines, United Airlines, and American Airlines Group. It also includes a host of financials, including regionals lenders SouthState Bank Corp, Home Bancshares, International Bancshares, and First Financial Bancorp (Ohio). Other financials include Victory Capital Holdings, Progressive Corp., and Horace Mann Educators.

These types of stocks have performed the way one would expect for a year that has thus far seen continued economic growth with a slightly higher 10 year Treasury yield. The stocks in the basket that are in the S&P 500 have seen an aggregate gain of close to 17% this year, while all other baskets with varying sensitivities to the economy and rates are down. That's useful for investors to know because it indicates that more of the same from the same economy and rates would mean more outperformance from DeBusschere's screen of high economic sensitivity and low debt sensitivity names.

Within the screen, we went a step further to identify the best examples of what the basket tries to capture. We screened out the few names that happen to be in the tech sector, avoided the few that are in defensive sectors -- those that aren't so sensitive to the economy -- and stayed away from energy, which is almost completely at the whims of the Iran situation.

Within all other sectors, we looked for companies with net debt that's no greater than 1.2 times expected 2026 earnings before interest, tax, depreciation and amortization (Ebitda). That's the S&P 500's aggregate net debt to Ebitda ratio, according to our calculations of FactSet data, so we wanted less debt-laden companies by that measure. Those included Airbnb, Brinker International, Oxford Industries, LegalZoom, Jacobs Solutions, Fluor Corp., and Arm Holdings.

A solid strategy is to buy all seven, not just one or two, so as to avoid single-stock risk. It's always possible a specific company could drop harshly if earnings disappoint. But buying a bunch of these is a solid move that increases the odds of success.

Even in times of war.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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March 25, 2026 08:37 ET (12:37 GMT)

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