US stocks remain resilient following the Federal Reserve’s decision to lower its key interest rate by another 25 basis points on Thursday.
According to the post-meeting statement:
The Committee judges that the risks of achieving its employment and inflation goals are roughly in balance.
Lower interest rates are generally considered positive for the equities market. Here are three stocks that are particularly attractive as the US central bank continues to cut its benchmark overnight borrowing rate:
AbbVie Inc (NYSE: ABBV)
AbbVie is a pharmaceutical behemoth that could benefit from lower interest rates as it requires easy access to cash to reliably fund its product pipeline – and rate cuts typically make it cheaper to borrow money.
The New York-listed firm recently reported better-than-expected financial results for its third quarter and raised its guidance for the full year making it all the more attractive to own for 2025.
Additionally, the company based out of North Carolina, Chicago is particularly well-positioned for healthy total returns as it currently pays a dividend yield of 3.27%.
Note that analysts at Cantor Fitzgerald raised their price target on AbbVie stock to $240 last week which indicates potential for about a 20% upside from here.
Chevron Corp (NYSE: CVX)
One of the reasons why the US Federal Reserve chooses to cut interest rates is to stimulate economic growth that tends to accelerate energy demand.
So, investors should consider buying Chevron stock amidst rate cuts as they could help the oil and gas behemoth improve its profitability in the months ahead.
Lower borrowing costs may also make it easier for CVX to fund new projects and unlock the next wave of growth. A rather lucrative dividend yield of 4.15% makes up for another great reason to have Chevron stock in your portfolio.
Shares of the energy company are worth owning also because the pending Hess acquisition that its management expects will close in the back half of next year will likely help increase production and scale operations.
Elf Beauty Inc (NYSE: ELF)
Rate cuts are directly linked with lower cost of capital that typically catalyzes high-growth names like Elf Beauty.
The beauty company has grown its shares as well as market share over the past 22 consecutive quarters.
Plus, lower interest rates tend to increase consumer spending, particularly on discretionary items like beauty products that ELF primarily deals in.
Elf stock is attractive at current levels also because it reported its financial results for the second quarter this week that came in well above Street estimates.
Unlike other names on this list, however, Elf stock does not pay a dividend at writing and is, therefore, not a suitable pick for income investors.
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