3 Growth Stocks That Could Benefit Most From a Fed Pivot


  • A Fed pivot could line up serious upside potential for these growth stocks.
  • Restaurant Brands (QSR): A combination of strong capital appreciation and dividend growth makes this total return play worth buying.
  • DraftKings (DKNG): A global online sports betting company that can do better as the consumer does better.
  • American Airlines (AAL): Lower interest rates could spur greater travel activity and be the boon investors hope for.
growth stocks - 3 Growth Stocks That Could Benefit Most From a Fed Pivot

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Rapid profit, revenue or cash flow growth exceeding industry averages generally characterizes growth stocks. These growth rates attract investors seeking substantial price appreciation. Typically, these companies are innovative disruptors, offering unique products or services and often leading in technology or intellectual property. Moreover, they constantly reinvest their capital, whether they generate or borrow it, which helps them grow and expand their production and workforce.

Although analysts and investors anticipate an 8.5% growth rate for S&P 500 stocks, other growth stocks have surpassed that rate. Below are three growth stocks that have stood out among other growth stocks due to their resilience, excellent earnings and constant increases in share prices.

And if interest rates drop, these cyclically-exposed companies could see major upside on the horizon.

Restaurant Brands (QSR)

A photo of a Burger King light-up sign outside a Burger King restaurant representing QSR stock.
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With more than 28,000 locations in 100 countries, Restaurant Brands (NYSE:QSR) is truly the epitome of a resilient growth stock that’s proven the test of time. This global quick-service restaurant provider holds some of the most reputable banners under its umbrella. The company has continued to pump out impressive results in recent years, which interest rate cuts will only exacerbate. (Restaurant Brands’ defensive business model will likely provide growth regardless of the economic outlook, with consumers looking to trade down in a recessionary environment where interest rates may be cut).

Notably, the company has passed its earnings growth to investors, raising its dividend by 25% since its IPO. This has attracted a number of different investor types to the stock. News of increased dividends in 2024 also sparks more interest, driven by an expected substantial 11% sales increase. On top of those excellent gains, the shares also offer share-buyback opportunities.

For investors seeking a company with global growth prospects and an improving outlook in an interest rate cut environment, this company remains among my top picks to consider right now.

DraftKings (DKNG)

Person holding smartphone with logo of US sports betting company DraftKings Inc. (DKNG) on screen in front of website. Focus on phone display. Unmodified photo.
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Another growth stock investors looking to play interest rate cuts should consider is DraftKings (NASDAQ:DKNG). This reputable gaming and e-sports entertainment company has been on a volatile ride of late. Indeed, although the company reported a loss of $802 million in Q4 2023, analysts are optimistic that it will reach a breakeven by 2025 and see its final loss reported in 2024. 

It’s expected that DraftKings will reach a 59% growth rate, and average annual growth will potentially allow the company to push for breakeven sooner. I’m of the view that this is entirely possible, given the trends around online gaming.

That’s largely because the online gaming company has expanded its online betting presence in key markets, strengthening its sports gambling branding. DraftKings recently expanded into 24 U.S. states and in Canada as well. Acquiring Jackpocket for $750 million broadens the company’s market reach. DraftKings dominates 31% of the U.S. online gambling market, boasting 3.5 million monthly unique payers, up 37% from 2022. This growth drives DKNG stock, which surged 125% in the past year.

This would be among my top picks for those looking to play a company with some strong long-term momentum.

American Airlines (AAL)

American Airlines plane on ramp in Chicago Airport. American Airlines is amongst the airlines cancelling flights
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It was only last year when American Airlines (NASDAQ:AAL) investors received the news they had hoped for. The airline giant announced it could reduce its massive debt pile by $10.9 billion since 2021. At this rate, American Airlines expects to reduce its debt load by $15 billion by 2025. Of course, with more than $40 billion of debt still on the books and interest rates still high, the outlook for airline stocks such as American remains murky. But a lower interest rate environment fixes this.

From a technical standpoint, AAL stock also saw a so-called Golden Cross form, which inherently makes the stock more attractive for traders. This airline stock has been moving in the right direction for fundamental reasons as well. After its excellent Q4 2023 results, bullish sentiment has been building, contributing to the stock’s upward trajectory.

Additionally, American Airlines expanded its fleet with 85 more orders of their A321neo aircraft. According to the data, there are now 219 orders pending for the said aircraft. CEO Robert Isom also expressed gratitude for how American Airlines is becoming a role model in today’s modern aircraft industry. If interest rates drop further, other large capital expenditures could become much more tenable, furthering this stock’s growth prospects moving forward.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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