We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Top Stocks to Gain From Lower Interest Rates in 2024
Read MoreHide Full Article
The Federal Reserve’s dovish shift and historic decision to end its monetary tightening policy certainly has been advantageous for tech, utility and real estate players.
This calls for investing in stocks such as CrowdStrike (CRWD - Free Report) , PagerDuty (PD - Free Report) , PLDT (PHI - Free Report) , Atmos Energy (ATO - Free Report) and Granite Construction (GVA - Free Report) that stand to benefit from a lower-interest-rate environment, heading into the new year.
Inflation is Slowing
The Fed’s favored measure of price pressure, the personal consumption expenditures (PCE) price index, dipped in November for the first time since 2020. Last month, the PCE index fell 0.1% and remained unchanged in October.
The PCE index increased 2.6% year over year in November. However, that’s less than the annual rate of 2.9% in the prior month and registered the lowest level since February 2021.
Above all, the core PCE rate, which eliminates the volatile food and energy prices, decelerated to 3.2% over the past 12-month period in November from October’s annual rate of 3.4%. This also marked the smallest rise since the beginning of 2021.
Retail inflation, meanwhile, has started to show signs of cooling down, while wholesale price pressures are also easing. The consumer price index (CPI) was up 3.1% in November from a year ago, signifying a drop after a 3.2% increase in October. By the way, the producer price index (PPI) increased only 0.9% year over year in November, way less than the rise above 11.5% in March 2022.
Fed’s Dovish Stance
Thanks to waning inflation, the Fed has not only kept interest rates unchanged in its latest policy meeting but also hinted at rate cuts in 2024.
The benchmark fed funds rate remained steady between 5.25% to 5.5%. However, the central bank expects the rate to decline to 4.6% by the end of next year against 5.1% projected three months earlier. This means that there will be a 75 basis points of interest rate cut in 2024.
The “dot plot” of the Federal Open Market Committee showed that further interest rate cuts in 2025 are possible as the price rise of indispensable commodities has slowed down amid a resilient economy, a strong labor market and confident consumers.
Stocks That Gain as Rate Hike Fears Wane
Tech stocks gain from a low-interest rate environment. When interest rates increase, tech companies’ future cash inflows are affected. This leads to an increase in the cost of borrowing, which impacts profit margins. Thus, interest rate cuts surely bode well for tech players.
Capital-intensive utility companies have higher levels of debt. Their debt level decreases in a low-interest rate environment, helping them pay off dues and book profits. Similarly, low interest rates work wonders for companies involved in the construction business since they reduce the borrowing costs of projects.
Top 5 Gainers
Thus, we have selected five stocks poised to make the most of the Fed’s aim to slash interest rates. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). Such stocks also have a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
CrowdStrike is a leader in next-generation endpoint protection, threat intelligence, and cyberattack response services. CRWD currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 4.3% over the past 60 days. The company’s expected earnings growth for next year is 23.8%.
PagerDuty provides digital operations management solutions. PD currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 16.1% over the past 60 days. The company’s expected earnings growth for next year is 9.7%.
PLDT offers telecommunications services. PHI currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 5.8% over the past 60 days. The company’s expected earnings growth for next year is 5.5%.
Atmos Energy is engaged in regulated natural gas distribution and storage business. ATO currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 1.2% over the past 60 days. The company’s expected earnings growth for next year is 6.4%.
Granite Construction is the nation's largest infrastructure contractor and producer of construction materials. GVA currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 9.9% over the past 60 days. The company’s expected earnings growth for next year is 37.5%.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
5 Top Stocks to Gain From Lower Interest Rates in 2024
The Federal Reserve’s dovish shift and historic decision to end its monetary tightening policy certainly has been advantageous for tech, utility and real estate players.
This calls for investing in stocks such as CrowdStrike (CRWD - Free Report) , PagerDuty (PD - Free Report) , PLDT (PHI - Free Report) , Atmos Energy (ATO - Free Report) and Granite Construction (GVA - Free Report) that stand to benefit from a lower-interest-rate environment, heading into the new year.
Inflation is Slowing
The Fed’s favored measure of price pressure, the personal consumption expenditures (PCE) price index, dipped in November for the first time since 2020. Last month, the PCE index fell 0.1% and remained unchanged in October.
The PCE index increased 2.6% year over year in November. However, that’s less than the annual rate of 2.9% in the prior month and registered the lowest level since February 2021.
Above all, the core PCE rate, which eliminates the volatile food and energy prices, decelerated to 3.2% over the past 12-month period in November from October’s annual rate of 3.4%. This also marked the smallest rise since the beginning of 2021.
Retail inflation, meanwhile, has started to show signs of cooling down, while wholesale price pressures are also easing. The consumer price index (CPI) was up 3.1% in November from a year ago, signifying a drop after a 3.2% increase in October. By the way, the producer price index (PPI) increased only 0.9% year over year in November, way less than the rise above 11.5% in March 2022.
Fed’s Dovish Stance
Thanks to waning inflation, the Fed has not only kept interest rates unchanged in its latest policy meeting but also hinted at rate cuts in 2024.
The benchmark fed funds rate remained steady between 5.25% to 5.5%. However, the central bank expects the rate to decline to 4.6% by the end of next year against 5.1% projected three months earlier. This means that there will be a 75 basis points of interest rate cut in 2024.
The “dot plot” of the Federal Open Market Committee showed that further interest rate cuts in 2025 are possible as the price rise of indispensable commodities has slowed down amid a resilient economy, a strong labor market and confident consumers.
Stocks That Gain as Rate Hike Fears Wane
Tech stocks gain from a low-interest rate environment. When interest rates increase, tech companies’ future cash inflows are affected. This leads to an increase in the cost of borrowing, which impacts profit margins. Thus, interest rate cuts surely bode well for tech players.
Capital-intensive utility companies have higher levels of debt. Their debt level decreases in a low-interest rate environment, helping them pay off dues and book profits. Similarly, low interest rates work wonders for companies involved in the construction business since they reduce the borrowing costs of projects.
Top 5 Gainers
Thus, we have selected five stocks poised to make the most of the Fed’s aim to slash interest rates. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). Such stocks also have a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
CrowdStrike is a leader in next-generation endpoint protection, threat intelligence, and cyberattack response services. CRWD currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 4.3% over the past 60 days. The company’s expected earnings growth for next year is 23.8%.
PagerDuty provides digital operations management solutions. PD currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 16.1% over the past 60 days. The company’s expected earnings growth for next year is 9.7%.
PLDT offers telecommunications services. PHI currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 5.8% over the past 60 days. The company’s expected earnings growth for next year is 5.5%.
Atmos Energy is engaged in regulated natural gas distribution and storage business. ATO currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 1.2% over the past 60 days. The company’s expected earnings growth for next year is 6.4%.
Granite Construction is the nation's largest infrastructure contractor and producer of construction materials. GVA currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 9.9% over the past 60 days. The company’s expected earnings growth for next year is 37.5%.