Here are 10 Stocks that'll Benefit from Lower Rates
The Fed has just cut interest rates again and signaled another rate cut next year.
Here are 10 stocks that'll benefit from lower rates: 🧵
1. $Pagaya Technologies Ltd.(PGY)$
- Leading second-look lending network.
- Expanding into auto loans and BNPL.
- Markdowns are normalizing.
Analysts expect 17% growth next year, but it's too low in my opinion. It can do way better in a lower-rate environment.
It's an asymmetric opportunity at 15x earnings, given that estimates are likely too low.
Image
2. $Upstart Holdings, Inc.(UPST)$
- Leading AI-powered lending marketplace.
- Originations grew 80% YoY, reaching $2.9 billion.
- It's trading at 15x 2027 earnings despite strong growth.
It got sold off after Q3 results because investors expected $3.3 billion in originations and wanted loans to come off the balance sheet.
The missing loan volume was due to overly conservative underwriting of their AI, which they can easily fix and ease while we go into a lower rate environment.
As rates come down, it can probably have an easier time selling the loans held on the balance sheet.
15x 2027 earnings are unduly depressed given that the Fed sees rate cuts both in 2026 and 2027.
Image
- Subprime lender charging three-digit interest rates.
- It has raised guidance two times this year.
- Looking to raise its lending capacity.
It has performed very well this year, but it was unable to expand, warehouse lending capacity due to higher rates.
It will now have an easier time expanding warehouse lending capacity due to lower rates, so forward growth expectations may be revised significantly.
It's too undervalued at 7x forward earnings.
Image
4.
- Neobank offering cash advances instead of overdraft.
- Preparing to launch BNPL product in early 2026.
- AI underwriting will drive margin expansion.
It has entered into a strategic partnership with Coastal Financial to provide better banking services to its members and become the principal bank for those who come for cash advances.
Cheap at 17x forward earnings, given that double-digit growth will likely be sustained for at least five more years.
Image
5.
$SoFi Technologies Inc.(SOFI)$
- Growth has accelerated to 37% this year.
- It's tapping into international payments.
- It has just relaunched crypto trading.
Lending is SoFi's largest business, and its growth has been slower recently due to a higher rate environment; it'll accelerate next year.
The stock isn't cheap, but it should be in your watchlist, and below $20 level should be seen as a buying opportunity.
Image
6. $Apollo Global Management LLC(APO)$
- Credit is Apollo's largest strategy.
- It's already growing fast at 19% YoY.
- Fears about private credit kept the stock depressed.
CEO Marc Rowan recently said that private credit was strong and will remain strong.
I expect Apollo's credit strategy to grow faster in the next two years due to lower expected rates.
I think it's pretty cheap at 15x forward earnings.
Image
- Fastest growing BNPL among the public ones.
- It passed $1 billion GMV for the first time in Q3.
- Has a very short average loan duration of 42 days.
Credit losses grew last quarter, which spiked concerns about consumer credit. Lower rates will accelerate growth, making up for the write-off-related slowdown in earnings growth.
Worth consideration at 17x forward earnings.
Image
8. $Affirm Holdings, Inc.(AFRM)$
- The biggest BNPL business in the US.
- It has just delivered its full year of positive earnings.
- GMV growth has been pretty strong, over 40% in the last two quarters.
Management has been trying to find an opening to enter other forms of financing, like longer-term loans and integration of broader financial services.
It can have a significant opportunity to achieve this as money will get cheaper in the next 12-24 months.
Though the stock is fairly valued, it could be considered as there are opportunities for faster growth going forward.
Image
- Largest digital bank in the world.
- Growing extremely fast in Mexico and Colombia.
- It has taken the first steps to expand into the US.
It applied for a banking license in the US this year and appointed one of the Co-Founders as the CEO of the emerging US arm.
It's still early, but if it can get the banking license, it can accelerate its entry to benefit from lower rates.
Even excluding this prospect, it'll benefit from a weaker USD as FX will turn into a tailwind since it generates most of its revenue in Brazilian Real.
Image
- Second largest digital bank in Brazil.
- Rapidly developing US operations in southern states.
- The valuation is depressed due to high exposure to unsecured loans.
Lower rates can accelerate the growth of its US operations.
Even if this doesn't happen, it'll still benefit from lower rates, as it also generates most of its revenue in Brazilian Real, and weaker USD means FX tailwinds.
Image
For SG users only, Welcome to open a CBA today and enjoy access to a trading limit of up to SGD 20,000 with unlimited trading on SG, HK, and US stocks, as well as ETFs.
🎉Cash Boost Account Now Supports 35,000+ Stocks & ETFs – Greater Flexibility Now
Find out more here.
Complete your first Cash Boost Account trade with a trade amount of ≥ SGD1000* to get SGD 688 stock vouchers*! The trade can be executed using any payment type available under the Cash Boost Account: Cash, CPF, SRS, or CDP.
Other helpful links:
💰Join the TB Contra Telegram Group to Get $10 Trading Vouchers Now🎉
How to open a CBA. How to link your CDP account. Other FAQs on CBA. Cash Boost Account Website.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
