Small cap stocks poised to benefit from the Fed’s cutting cycle

BofA analysts highlighted a list of companies that historically have benefited from the Federal Reserve’s interest rate cutting cycles since 1989.

These are Russell 2000 (IWM) stocks that rank highly based on value, dividend, return on assets and analysts’ ratings.

More specifically, these companies are part of the top two quintiles of the index on either cash flow on operating activities/price or free cash flow yield; they are dividend payers; among the top two quintiles by return on assets; and are rated “buy” or “neutral” by BofA fundamental analysts.

To add more context, we have added their Seeking Alpha’s Quant ratings. SA Quant bases each stock’s performance on certain critical quantitative measures, such as valuation, growth, profitability, and momentum. Each stock is rated on a scale of 1 to 5, with any rating above 3.5 indicating a bullish rating. A score of 2.5 or below represents a bearish profile.

Here are the stocks:

• Academy Sports & Outdoors (ASO) – SA Quant rating: 3.68 (Buy)
• Apple Hospitality REIT Inc (APLE) – SA Quant rating: 2.95 (Hold)
• ArcBest Corp (ARCB) – SA Quant rating: 2.15 (Sell)
• Black Hills Corp (BKH) – SA Quant rating: 2.98 (Hold)
• Cactus Inc (WHD) – SA Quant rating: 2.22 (Sell)
• California Resources Corp (CRC) – SA Quant rating: 2.21 (Sell)
• California Water Service Group (CWT) – SA Quant rating: 2.25 (Sell)
• Cheesecake Factory Inc (CAKE) – SA Quant rating: 2.69 (Hold)
• Concentra Group Holdings (CON) – SA Quant rating: 2.67 (Hold)
• CONMED Corp (CNMD) – SA Quant rating: 3.04 (Hold)
• DiamondRock Hospitality Co (DRH) – SA Quant rating: 4.86 (Strong buy)
• Essential Properties Realty (EPRT) – SA Quant rating: 4.52 (Strong buy)
• Getty Realty Corp (GTY) – SA Quant rating: 4.69 (Strong buy)
• Granite Ridge Resources Inc (GRNT) – SA Quant rating: 2.76 (Hold)
• Greif Inc Materials (GEF) – SA Quant rating: 3.06 (Hold)
• Group 1 Automotive Inc (GPI) – SA Quant rating: 2.66 (Hold)
• InvenTrust Properties Corp (IVT) – SA Quant rating: 4.07 (Buy)
• KB Home (KBH) – SA Quant rating: 2.76 (Hold)
• Kite Realty Group Trust (KRG) – SA Quant rating: 4.55 (Strong buy)
• Kodiak Gas Services Inc (KGS) – SA Quant rating: 2.93 (Hold)
• Liberty Energy Inc (LBRT) – SA Quant rating: 3.39 (Hold)
• Magnolia Oil & Gas Corp (MGY) – SA Quant rating: 2.02 (Sell)
• National Health Investors Inc (NHI) – SA Quant rating: 4.63 (Strong buy)
• Northern Oil & Gas Inc (NOG) – SA Quant rating: 2.92 (Hold)
• ONE Gas Inc (OGS) – SA Quant rating: 3.01 (Hold)
• Phinia Inc (PHIN) – SA Quant rating: 3.86 (Buy)
• Playtika Holding Corp (PLTK) – SA Quant rating: 2.81 (Hold)
• Red Rock Resorts Inc (RRR) – SA Quant rating: 2.87 (Hold)
• Rush Enterprises Inc (RUSHA) – SA Quant rating: 2.62 (Hold)
• Ryman Hospitality Properties (RHP) – SA Quant rating: 2.65 (Hold)
• H2O America (HTO) – SA Quant rating: 2.27 (Sell)
• Sabra Health Care REIT Inc (SBRA) – SA Quant rating: 2.76 (Hold)
• Southwest Gas Holdings Inc (SWX) – SA Quant rating: 4.33 (Buy)
• Spire Inc Utilities Gas (SR) – SA Quant rating: 4.41 (Buy)
• Sylvamo Corp (SLVM) – SA Quant rating: 1.72 (Sell)
• Tanger Inc (SKT) – SA Quant rating: 3.17 (Hold)
• US Physical Therapy Inc (USPH) – SA Quant rating: 2.63 (Hold)
• Visteon Corp (VC) – SA Quant rating: 2.99 (Hold)
• Signet Jewelers Ltd (SIG) – SA Quant rating: 3.65 (Buy)
• Scorpio Tankers Inc (STNG) – SA Quant rating: 3.05 (Hold)