It can be challenging to invest in ASX shares when interest rates are rising because it can lead to volatility across a variety of sectors.
I want to focus on two businesses that I think are likely to see their earnings largely unaffected during this difficult period.
If I were looking for long-term investment ideas, the two below are ones I'd heavily consider today.
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Lovisa Holdings Ltd (ASX: LOV)
Lovisa is fast-growing jewellery business with a sizeable presence in numerous markets including Australia, New Zealand, Singapore, Malaysia, South Africa, the UK, France, Germany, the Netherlands, Poland, Italy, the US and Canada.
One of the main reasons I think Lovisa could perform strongly during this period is because of its target market, which is a relatively young demographic. Rising interest rates is a problem for borrowers, which is a significant chunk of Australians and in citizens Lovisa's other important markets.
But, young shoppers don't usually have a mortgage or other forms of debt, so Lovisa's consumer base may not be as impacted during this period.
The company performed resiliently a few years ago and I'm expecting it to do well again during this period. Plus, the business continues to expand its global store network, giving it the potential to further grow its total sales, even if comparable sales growth for its existing stores may slow (or go negative) in the time being.
In the FY26 half-year result, the business reported its Lovisa store network increased 15.5% to 1,089, underlying revenue grew 22.7% to $498.1 million and net profit after tax (NPAT) rose 20.4% to $109.1 million.
In five years, I think this ASX share will have a much larger store network, stronger scale benefits and pleasingly higher revenue.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is a diversified investment house, with a defensive portfolio, which positions it well for the current situation.
For starters, it has a large investment in ASX energy share New Hope Corporation Ltd (ASX: NHC), which could see higher earnings amid the disrupted energy supply situation in the Middle East.
Soul Patts is also invested in a number of other sectors that could see resilient or growing earnings such as industrial properties, swimming schools, agriculture, telecommunications and credit.
I was impressed by the company's FY26 half-year result. Net cash flow from investments rose 15.4% year-over-year, the pre-tax net asset value (NAV) return was 9.7% and the interim dividend per share was hiked by 9.1%.
On top of that, remember that as an investment house, Soul Patts has the ability to buy (and sell) investments and take advantage of price changes.
Soul Patts has been an effective investment company for many decades and I'm expecting it to continue to perform for many years to come because of its smart investment strategy and its ability to adjust its portfolio.
