Stocks to Watch for a Rebound Amid September Rate Cut Hopes

With investor sentiment remaining high following Federal Reserve Chair Jerome Powell’s reconfirmation that a rate cut could be ahead as soon as September, several stocks may be poised for a sharp rebound from various sectors where companies are sensitive to borrowing costs, capital market activity, and consumer demand.

Keeping this in mind, here are four stocks that investors will want to pay attention to from the consumer discretionary, construction, and tech sectors.

Comcast – CMCSA

Sector: Consumer Discretionary

Although telecom and media companies are generally less cyclical and less sensitive to interest rates, it’s no secret that they tend to carry high debt loads, which can be softened by lower borrowing costs. Comcast CMCSA is a prime example of this, having over $95 billion in long-term debt at the end of Q2, as lower interest rates could certainly reduce its refinancing costs.

This debt management scenario could vastly improve investor sentiment for Comcast stock, with CMCSA still hovering near its 52-week lows of around $31 a share. To that point, lower interest expenses should mean more cash for buybacks, dividends, and strategic investments, which are needed considering the drop in Comcast stock has also been attributed to its internet broadband subscriber losses and streaming uncertainty.

That said, it’s noteworthy that Comcast checks the box as a defensive stock that could have plenty of upside at some point, with the company exceeding the Zacks EPS Consensus for a remarkable 34 consecutive quarters, as illustrated in the Price, Consensus, and Surprise chart below. More intriguing, CMCSA trades under 8X forward earnings and currently offers a very enticing 3.87% annual dividend yield.

Century Communities – CCS

Sector: Construction

Of course, lower interest rates reduce mortgage costs and can unlock housing demand, with Century Communities CCS being a notable homebuilder stock that could be in store for an extended rebound.

As a leading developer of single-family residential homes, Century Communities' stock is 40% below its 52-week high of $108 a share and is starting to stand out in terms of value at a reasonable 12.5X forward earnings multiple and less than 1X forward sales. Correlating with what is projected to be a more favorable operating environment, Century Communities should see a sharp rebound on its top and bottom lines in fiscal 2026 but what further separates this homebuilder stock from many of its peers is that CCS offers a 1.72% annual dividend yield.  

Generating solid cash flows from high demand and rising home prices during the post-pandemic housing boom, Century Communities introduced its dividend in 2021 to signal confidence in its financial stability and commitment to returning capital to shareholders. Furthermore, with a payout ratio of under 15%, Century Communities can comfortably afford to offer dividends while having enough leverage to focus on its growth as well.

Tech Stocks – ADBE & INTC

Discretionary spending by consumers and enterprises is boosted by lower rates and often improves valuations for growth-oriented tech firms, with Adobe ADBE and Intel INTC being two of interest in particular.

Lower rates will make it easier for Adobe to fund its aggressive initiatives into AI and mobile expansion. Plus, AI integration across Adobe’s Creative Cloud and Document Cloud is driving new use cases and subscription growth, and ADBE is still trading 38% from its 52-week peak of $587 a share.

Reductions in borrowing costs are very appealing for both of these tech companies, especially Intel, after posting its first unprofitable year since 1986 last year (-$18.8 billion). Intel’s AI endeavors as a chipmaker would be propelled as well, and this follows the recent announcement that the U.S. government has taken a 10% stake in the company, converting funds it issued through the CHIPS Act grants into equity. While Intel stock has started to edge closer to its one-year high of $27 a share, INTC is well off its multi-year peaks of over $50.

Bottom Line

A September rate cut by the Federal Reserve is expected to ripple across various sectors, with Comcast, Century Communities, Adobe, and Intel being primary examples of companies that could benefit exponentially.

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This article originally published on Zacks Investment Research (zacks.com).

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