3 stocks to have in your portfolio before the rate cut

Inflation data indicates that the interest rate cut may be postponed.
But it's great news for investors who have more time to position themselves in the stock market.
This week, all eyes are on the core personal consumption expenditure (PCE) price index, a crucial indicator closely watched by the Federal Reserve in gauging inflation.
Projections indicate a likely increase of 0.4% on a monthly basis, fueling speculation about the Fed's future moves and the direction of interest rates.
Markets are currently pricing in a 20.8% chance of a rate cut in May, significantly lower than the 90% predicted just a month ago, according to CME's FedWatch.
The interpretation of inflation data could further influence these expectations, with possible effects on investor decisions.
In this context, here are the 3 stocks to have in your portfolio before the rate cut.
1) Amazon Amazon.com (AMZN) started 2024 with great momentum, accelerating upward after the earnings report that literally sent its stock price soaring.
Currently, the tech giant is approaching the records achieved in 2021 at $188.
However, to maintain its leading position, Amazon must continue to improve the profitability of its vast online sales business and face competition in the cloud computing sector.
Despite its popularity, Amazon faces price competitiveness challenges that impact its margins.
In the fourth quarter of 2023, the company reported net sales of $170 billion, up 14% from a year earlier.
However, net income for the quarter, which was $10.6 billion, represents only 6% of total revenue.
A signal that is causing concern among many investors is the sale of part of the Amazon founder's shares.
Bezos sold about $2 billion in Amazon shares last week, for a total of about $6 billion in recent months.
While maintaining a sizable stake in shares, Bezos has adopted a sales plan that calls for divesting up to 50 million shares by January 31, 2025.
Despite these developments, Wall Street analysts maintain a positive view on Amazon, with 97% of them give a "buy" rating to the company's shares.
The average 12-month price forecast is $207 per share, indicating growth potential of 23% from the Feb.
20 open.
2) Home Depot Home Depot, a leading home improvement retailer, is also an attractive option for investors ahead of potential interest rate cuts from the Federal Reserve.
Despite a period of slowing activity due to moderation in consumer spending, the company could benefit from a lower rate environment.
According to the latest quarterly data, Home Depot reported earnings per share above analysts' expectations, recording a value of $2.82 compared to the expected $2.77.
Revenue hit $34.79 billion, beating Wall Street estimates of $34.64 billion.
Despite a reduction in net income to $2.80 billion from $3.36 billion a year earlier and a decline in net sales from $35.83 billion in the same period, Home Depot demonstrates resilience in the time.
These quarterly results indicate solid performance despite the challenges encountered.
For the next fiscal year 2024, Home Depot expects to increase total sales by 1% and open about a dozen new stores.
This positive outlook reflects the company's confidence in its ability to grow.
With profit margins typically above 10% and consistent demand for its products and services, Home Depot remains an attractive option for investors looking for stability and long-term growth potential.
3) AT&T AT&T, the telecom giant, may not see an increase in revenues if interest rates fall.
However, this will help reduce the risk of spending on its 5G network.
A key concern for telecom investors is often the significant costs and debt these companies incur, as well as the seemingly endless need to invest in infrastructure upgrades and improvements.
The lower rates will help reduce financing costs for AT&T.
One immediate way lower interest rates could help AT&T stock is by attracting more income investors.
At the moment, interest rates are high and many people may be inclined to put money in the bank or invest in bonds to take advantage of higher risk-free rates.
Even though AT&T stock offers a high dividend yield of 6.5%, there are some risks related mainly to the possibility that the value of the shares may decline, not that the dividend payments are unsustainable.
AT&T reported encouraging results for 2023, with adjusted operating profit of $24.7 billion, higher than the prior year's $23.5 billion.
Operating cash flow of 38.3 billion was also higher than the 35.8 billion generated in 2022.
However, the company continues to have growth issues that could limit its growth potential.
Despite this, AT&T remains an attractive option for income-focused investors, especially when rates begin to fall.
DISCLAIMER The information and considerations contained in this article should not be used as the sole or primary support on which to make investment decisions.
The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon.
The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.