The market is buzzing about possible interest rate reductions as the US Federal Reserve prepares for their policy meeting in this coming week. Although a cut in interest rates is not likely to happen immediately, the markets believe that it will begin by September.
It is a good time to make an investment in companies that will benefit from the lower rates. Experts believe that four stocks will prosper in the new rate-cutting environment.
Chevron Corp (NYSE: CVX)
Chevron will benefit from the lower interest rate.
In the past, rate reductions have stimulated economic growth and increased oil demand.
Reduced borrowing costs can increase Chevron’s profitability, and new projects will be more viable financially.
Chevron’s stock has fallen more than 15 percent from its high. It offers a 4.17% dividend yield.
Chevron is a good option for those investors who want to take advantage of the anticipated rate reductions.
AT&T Inc (NYSE: T)
AT&T is another stock that stands out and will benefit from the upcoming rate reductions.
For network expansion and upgrades, the telecommunications giant will need to make significant capital investments.
These investments can be more accessible and profitable with lower interest rates.
AT&T will also be able to manage its debt better with lower borrowing costs, resulting in improved cash flow.
AT&T’s dividend yield is 5.87%. This makes it a good candidate for your portfolio, even before the rate cut.
Uber Technologies Inc (NYSE: UBER)
Uber will benefit from the lower borrowing cost as it is a company that has a high growth rate.
Reduced rates can help businesses expand and encourage competitive pricing and technological advances.
Wall Street has a “buy” consensus rating, with an average target price of $87.50, which represents a 35% potential increase over current levels.
Uber is a good investment in an environment with lower rates of interest.
3M Co. (NYSE: MMM).
Lower interest rates tend to boost consumer spending.
It can increase demand for 3M’s wide range of products from Post-it Notes to Scotch Tape.
A weaker dollar can also make 3M products more competitive on international markets. This could boost exports.
3M has recently exceeded Wall Street expectations for its second quarter financial results and increased its guidance on operating margins and adjusted earnings per share for the entire year. This makes it an attractive candidate for a rate reduction.
Investors should position their portfolios so that they can benefit as the Federal Reserve moves closer to a possible interest rate cut. You can boost your portfolio performance by strategically investing in companies like these.
The post Four stocks to purchase before the Fed reduces interest rates in 2020 may change as new information unfolds
