2 Stocks Set To Deliver Strong Returns As Fed Cuts Rates
Investing.com | Mar 05, 2020 04:47
The Federal Reserve cut interest rates by 50 basis points to a range of 1% to 1.25% in an emergency move earlier this week, citing the “evolving risks” of the coronavirus to the U.S. economy. The last time the Fed made a rate cut between scheduled meetings was in October 2008 at the height of the global financial crisis.
Get The App
The U.S. central bank may not be done lowering interest rates, either. Futures traders are betting on another half percentage point cut being put in place when the Fed meets later this month.
Get The App
Get The App
As the Fed further eases borrowing costs, these three stocks have the potential to deliver strong returns in the months ahead:
Get The App
Get The App
The first name to consider hails from the gold mining sector. Expectations of monetary stimulus and lower interest rates tend to benefit gold, which is currently trading just below its highest level in seven years.
Get The App
Get The App
Newmont Goldcorp (NYSE:NEM)—formed from the merger of Newmont Mining and Goldcorp in April 2019—has seen its stock outperform the broader market in recent weeks. Shares, which have soared around 12% so far this week and are up 48% over the past 12 months, ended at $51.00 on Wednesday. They reached their highest level since November 2012 at $51.34 on Mar. 3.
Get The App
The world’s largest gold producer by market value, output and reserves, reported fourth quarter revenue of $2.97 billion in its latest quarterly results on Feb. 20, which represented explosive quarter-over-quarter revenue growth of 45%.
Get The App
Get The App
The Greenwood Village, Colorado-based company has benefitted from both a sharp increase in gold prices and higher production volumes. Newmont Goldcorp’s Q4 average saw gold prices jump 20% from the year-ago period to $1,478 per ounce, while output increased 27% year-over-year to 1.83 million ounces.
Get The App
Get The App
Looking ahead, the corporation expects attributable gold production for 2020 to be 6.4 million ounces and all-in sustaining costs for gold to be $975 per ounce sold. As long as the yellow metal's prices keep appreciating, robust performance looks set to continue.
Get The App
Newmont also announced plans to increase its annual dividend by 79% to $1.00 per share, another move that will benefit investors.
Get The App
Get The App
With interest rates expected to remain low, real estate investment trusts (REIT) offer the benefits of real estate investing without the responsibilities of owning and managing property.
Get The App
Get The App
Realty Income (NYSE:O), based in San Diego, California, owns 5,797 properties totaling 93.3 million rentable square feet. The corporation focuses on businesses that are less threatened by e-commerce or recessions, such as convenience store chains like Walgreens and 7-Eleven.
Get The App
Get The App
Shares, which are trading near an all-time high, are up 8% so far this week. Realty Income closed at $78.15 last night with a market cap of $26.7 billion. The stock touched an intraday peak of $84.92 on Feb. 20.
Get The App
Realty Income beat estimates on both the top and bottom lines when it released fourth quarter earnings on Feb. 19. Earnings per share totaled 39 cents, surpassing expectations of EPS of 35 cents and representing a 35% increase from 29 cents in the same period a year earlier. Revenue also climbed 20% from the year-ago period to $394.2 million, above forecasts of $382.5 million.
Get The App
Even more promising, adjusted funds from operations, a more accurate measure of REIT profitability than net income, climbed to 86 cents per share from 79 cents in the fourth quarter of 2018.
Get The App
Get The App
The company is also one of just a few REITs that pay dividends monthly, rather than quarterly. Realty Income offers a monthly dividend of $0.2325 per share and a yield of 3.74%.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.