Looking at yahoo finance key stats StockA: Debt to equity of 100 StockB: Debt to equity of 20 .... long story short stock A has more debt all things considered equal if interest rates rise... Should stockB outperform stockA?
1) The growth rates and P/E ratios should have more bearing on the stock performance. 2) A company can have "a lot" of debt but if the debt is invested in a high-growth business, interest rate increases won't matter.
I understand that... but if interest rates rise 1% for the day.... should that have an affect on the company w/ more debt?
But usually the debt is used for crap acquisitions. Like HP buying Palm and then throwing away the entire technology a few months later. Microsoft buying Danger for 1.2 billion and then throwing out the tech a few months later. Usually the debt is used for acquisitions that end up falling into goodwill and expensed out over the years.