Financial stocks will finally be able to breathe a sigh of relief once the Federal Reserve raises interest rates -- which would be the first time in nearly 10 years. Yet, investor focus is already shifting from who benefits from a rate hike to "what the environment looks like after the first rate hike".
The analysts noted the six financial stocks it considers "top picks" based on higher rates. But the note also mentioned other financial stocks set to benefit once the Fed lifts rates.
Raymond James Financial, Bank of New York Mellon, Northern Trust, and Bank of America are "best-positioned in the event of a 'one-and-done'" rate hike as stocks that "get most of the earnings upside from rates in the initial hikes rather than relying on normalized rates," the analysts wrote.
As well, "deposit betas could be a source of underappreciated upside as we do not believe banks will pass on a large part of the initial 50 basis point [rise]" to customers, the analysts wrote, with JPMorgan Chase, Bank of America, Wells Fargo, PNC Financial Services and E*Trade Financial most exposed.
Goldman's top stock picks on higher rates are: Bank of America, JPMorgan Chase & Co., Northern Trust Corp., Regions Financial, Charles Schwab Corp. and Zion Bancorp.
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