Value Stocks That Could Hold Up Better As Bond Yields Stay High

With the 30-year Treasury yield touching 5.28% and bond markets on edge, many investors are rethinking how much risk they want to take in stocks. Higher and more volatile yields can pressure valuations, but they can also shine a light on companies with lower P/E ratios, stronger balance sheets and steadier cash flows. This article looks at 3 stocks from a value-focused screener that are closely tied to the current rate backdrop. It explores how each stock might be positively exposed to this new bond market regime and where potential resilience could matter most.

Costain Group (LSE:COST)

Overview: Costain Group is a UK based infrastructure and engineering company that plans, builds, and maintains major transport, water, energy, and defense projects, combining consultancy, design, and construction services. Its work spans roads, rail, utilities, and nuclear assets for large public and regulated clients.

Operations: Costain Group generates about £605.3 million of revenue from Transportation and £440.4 million from Natural Resources, with total revenue of £1.05b coming entirely from the United Kingdom.

Market Cap: £557.4 million

Costain Group stands out in a higher yield world because it combines relatively low P/E pricing with a long pipeline of government backed infrastructure work that can provide revenue visibility when risk appetite in equities is weaker. Recent contract wins and extensions with United Utilities, Transport for London and local authorities point to ongoing demand for its transport and water expertise. Analysts currently expect earnings growth at single digit rates. At the same time, investors need to weigh real risks such as dependence on UK public sector budgets, execution challenges in complex projects and a balance sheet funded entirely through external borrowing. That mix of resilient contracts, modest valuation and non trivial risk is what makes the next level of analysis on Costain worth your attention.

Costain’s low P/E and government backed order book hint at a story the market may not be fully pricing in yet. Get the full picture with the 4 key rewards and 1 important warning sign

Morgan Sindall Group (LSE:MGNS)

Overview: Morgan Sindall Group is a UK construction and regeneration company that builds and refurbishes homes, offices and public buildings, while also reshaping urban areas through long term partnerships with local authorities, housing associations and the wider public sector. Its activities cover everything from fit outs of commercial and government offices to infrastructure work across energy, rail, highways, water and defense.

Operations: Morgan Sindall Group generates £1.94b from Fit Out, £920.6m from Infrastructure, £845.3m from Partnership Housing and £50.9m from Mixed Use Partnerships, with segment adjustments and eliminations bringing total reported revenue to around £5.21b, all from the United Kingdom.

Market Cap: £2.07b

Morgan Sindall Group may appeal to value focused investors because it combines a low double digit P/E, a record order book and recent double digit earnings growth with a balance sheet that management highlights as a competitive advantage when financing conditions tighten. Revenue and net income for the half year to June 2026 both moved higher, while the board approved higher interim and final dividends, which signals confidence in the cash generation of the business. On the other hand, the company is reliant on large, complex regeneration and infrastructure projects that carry policy, planning and execution risk, and its dividend record has not always been smooth. The key consideration is how that mix of strong fundamentals, policy exposure and bond market driven risk appetite could influence where Morgan Sindall trades next.

Morgan Sindall’s low double digit P/E, record order book and cash focused balance sheet could be masking where the real inflection sits. Get the full story through the 4 key rewards and 1 important warning sign

CF Industries Holdings (CF)

Overview: CF Industries Holdings is a large producer of nitrogen based fertilizers and industrial products, making ammonia, urea and related nitrogen solutions that farmers and industrial customers use to grow crops and reduce emissions across North America, Europe and other international markets.

Operations: CF Industries generates about US$2.3b from Ammonia, US$2.3b from Urea Ammonium Nitrate Solution, US$1.9b from Granular Urea, US$540m from Other products and US$378m from Ammonium Nitrate.

Market Cap: US$19.3b

CF Industries Holdings sits in a part of the market many investors look to when long term bond yields rise and risk appetite in equities cools. It combines a relatively low P/E with high quality earnings, strong free cash flow and a 1.6% dividend that was recently raised by 20%, and it has also been returning large sums through buybacks. At the same time, the business is tied to nitrogen fertilizer pricing, government incentives for low carbon ammonia and regulations that could change. This creates real volatility risk if supply loosens or policy support fades. For investors who want value exposure in a defensive sector, the tension between that resilience and those long term risks is what makes CF Industries worth a closer look.

CF Industries Holdings looks like a classic value play with a twist, where a low P/E, strong free cash flow and rising dividend may be masking a bigger story around low carbon ammonia. See how the analysis report for CF Industries Holdings

The 3 stocks in this article are only a starting point, since the full Value Stocks screener surfaced 24 more companies with similarly compelling balance sheet strength, cash flow profiles and valuation stories. Use Simply Wall St to identify, compare and analyze the specific catalysts and narratives that matter to you so you can focus on the highest conviction ideas for your watchlist.

Take Control of Your Investment Journey

If CF Industries Holdings or any of these companies sound like a great opportunity, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value the ideal entry point. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

Seeking Fresh Alternatives Beyond These Three?

Fresh ideas do not stay under the radar for long. Some stocks are building quiet breakout potential right now. Before the crowd catches on and momentum starts flying, consider your options carefully.

• Spot sturdy businesses before they get re-rated by scanning a curated list of solid balance sheet and fundamentals (20 results) designed to handle shifting rates without fragile financing.
• Explore potential income momentum from companies that aim to keep payouts flowing by checking a hand-picked group of 5 dividend fortresses built for staying power.
• Target early-stage growth stories where hype has not yet caught up to the numbers by tracking 10 high quality undiscovered gems that remain under the radar for now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com