The Federal Reserve’s rate hiking cycle appears to have reached its end. With this in mind, Barclays named its top stock picks for the rate cuts in sight. “The timing of the eventual cut in interest rates has been one of the key debates for investors since the onset of the Fed’s hiking cycle. However, this past December’s FOMC meeting seemingly became a de facto turning point for the markets in this debate, providing the long-awaited ‘Fed Pivot’ or ‘Fed Pause,'” analyst Terence Malone wrote in a Thursday note. A hotter-than-expected CPI report released earlier in February has likely pushed back the start of the rate cuts to June, Malone said. This would likely push the federal funds target range to between 4.5% and 4.75% by the end of this year, he said. Take a look at the stocks Barclays thinks are best positioned for lower rates later this year. The following companies are all rated overweight by Barclays’ analysts. Darden Restaurants is one of the consumer names Barclays believes can outperform when the Fed loosens rates. The restaurant group, whose brands include Olive Garden and LongHorn Steakhouse, benefits from being the only large-cap casual dining company, according to analyst Jeff Bernstein. This gives the company more scale, data and insights, as well as “rigorous” strategic planning efforts. Even in the case of “a broader economic slowdown (should such transpire), we continue to view QSR as better positioned than casual dining, benefiting from lower priced value offerings coupled with a franchise model to insulate against earnings volatility,” Bernstein said. Shares are up nearly 3% year to date, and 13.1% over the past 12 months. Regional banking company Fifth Third Bancorp is another name on Barclays’ list. Shares are down more than 3% in 2024, following a 7.1% decline over the past year. However, analyst Jason Goldberg expects recent management changes and “disciplined” credit risk and balance sheet management could boost the bank’s stock. Fifth…
2024-02-23 12:02:00
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