3 Stocks Investors May Revisit as Treasury Yields Raise the Appeal of Income

Rising U.S. Treasury yields are quietly rewriting the risk and reward math for almost every corner of your portfolio. Cash and government bonds suddenly look more appealing, which can leave some stocks exposed and others standing out as potential refuges for investors who care about stability and income. This article walks through three stocks that sit squarely in the path of this yield story and explains how each might fit into your playbook.

The three stocks in this article are only a starting sample, and the full screen surfaced 38 more companies tied to U.S. Treasury and government bond themes with equally compelling stories that are not covered here. If you want to identify your own balance of stability and income, head straight to the U.S. Treasury and Government Bond Funds screener to analyze the full set and focus on the ideas that best fit your portfolio.

Pacific Current Group (ASX:PAC)

Pacific Current Group is a Melbourne based multi boutique asset manager that partners with specialist investment firms and connects them with institutional and individual clients worldwide. Its reported revenue mix shows losses from boutique investments of about A$39 million and corporate investments of about A$7 million, partly offset by A$5 million from central administration, underlining how dependent the business is on the performance of its boutique partnerships. The company sits in the smaller end of the market with a market cap of roughly A$324 million.

Pacific Current Group sits at the crossroads of higher government bond yields and demand for specialist managers, which can make it an option to consider if you are weighing income focused assets against equities. The company blends a multi boutique model, a relatively low P/B of about 0.8x and an expanded buyback that could lift earnings per share over time, together with clear risks such as a shrinking recurring revenue base, pressure on active managers and reliance on external borrowing. If you want exposure to a manager that could be influenced by interest in high grade bond strategies but still carries meaningful business and earnings risk, this is a story that some investors may wish to examine more closely.

Pacific Current Group’s low P/B and expanded buyback may be masking a much bigger story about how its boutique partnerships respond to higher bond yields. Scan the full 1 key reward and 2 important warning signs (1 is major!)

Build your own income and stability shortlist around Pacific Current Group

Pacific Current Group and the other two stocks in this article came from the same Simply Wall St filters, but the real value is in tailoring those filters to your own goals. Use our flexible Screener to blend valuation, income and quality criteria, or jump straight into any of our curated Investing Ideas.

PensionBee Group (LSE:PBEE)

PensionBee Group runs a digital platform that lets customers in the UK and US combine old pensions, make new contributions, track projected retirement income and withdraw savings through an app or website. It currently generates about £42.6 million in revenue from its core online retirement services and has a market cap of roughly £339 million, which puts it firmly in the mid cap fintech space.

PensionBee Group sits in a segment that may appeal to investors who want retirement focused exposure as U.S. Treasury yields reset expectations for income and safety. The company is still loss making and carries funding risk from relying on external borrowing. Analysts have published expectations of earnings improvement over the next few years as its digital model scales and marketing spend becomes more efficient. Alongside the push into the US, a board that has recently added independent heavyweights and a valuation that already prices in high growth through a rich P/S, PensionBee Group is a stock where the potential opportunity is closely linked to execution and the timing of any move toward profitability.

PensionBee Group’s efforts to scale its digital pension platform while it remains loss making raise a key question. Are earnings likely to catch up with the story, or is the stretched P/S already reflecting that? Get the full picture in the analyst forecasts for PensionBee Group

Mercia Asset Management (AIM:MERC)

Mercia Asset Management is a UK based private equity and venture capital firm that backs early stage through later stage companies across technology, healthcare, engineering, life sciences and more, often taking board seats and using a mix of equity, debt and convertible securities. The business currently generates about £34 million from proactive specialist asset management, all from the UK, and has a market cap of roughly £113 million.

Mercia Asset Management sits at an interesting crossroads for investors who focus on income, growth potential and the rising appeal of safer assets. The group runs a diversified investment platform with about £34 million of revenue from specialist asset management. However, it reported a loss of £8.61 million in its last full year and its 3.74% dividend is not well covered by earnings or free cash flow. Analysts expect strong improvements in earnings quality over the next few years and see scope for higher revenue, while Mercia also has a new multi year bank facility in place to support its Mercia '27 growth plan. With government bond yields rising and competition for capital increasing, a key question for investors is whether this blend of fund management exposure and unprofitable recent results is being fairly reflected in the current share price.

Mercia Asset Management’s mix of unprofitable recent results and a 3.74% dividend suggests the real story sits in the details. Walk through the full analysis report for Mercia Asset Management to see what could shift this balance next.

Seeking Fresh Alternatives Before Others Do

Markets move fast, and the next breakout themes often fly under the radar at first. Scan these fresh stock ideas before the momentum is caught by the crowd and decide whether they fit your strategy.

• Spot cash generative businesses before they trend by running the 10 high quality undervalued stocks while their valuations still look reasonable and attention has not fully shifted their way.
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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.

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