Business Forum • 21 November, 2024 at 9:14 AM
The global rate-cutting cycle brings promising opportunities for specific sectors, companies, and Romanian investors focused on growth stocks. Companies in tech and innovation industries, which rely heavily on external financing for expansion, tend to benefit significantly from improved borrowing conditions and increased consumer purchasing power.
Lower discount rates make their future cash flows more attractive, leading to higher valuations. Analysts at Freedom24, the trading platform providing access to the world's largest stock exchanges, have compiled a list of top industries and stocks poised to thrive in this favourable low-interest rate environment.
1. Cloud computing and SaaS
These companies typically operate with high margins and strong recurring revenue models that attract investors during periods of low rates.
- Snowflake (SNOW). Specialises in cloud storage solutions, a sector experiencing strong growth as companies move to cloud analytics.
- ServiceNow (NOW). Provides digital workflows and automation tools to help companies modernise their IT infrastructure.
- Datadog (DDOG). A cloud-based monitoring and analytics platform that helps enterprises monitor their IT infrastructure and applications.
2. Artificial intelligence and machine learning
AI-focused stocks are becoming increasingly attractive as AI is poised to transform industries from healthcare to financial services.
- NVIDIA (NVDA). A leader in graphics processing units (GPUs) that support AI and machine learning applications.
- C3.ai (AI). Provides enterprise AI software for a variety of industries, helping companies implement machine learning models.
- Palantir Technologies (PLTR). Offers data analytics and AI solutions widely used in the public and private sectors for complex data analysis.
3. Electric vehicles (EVs) and clean energy
These sectors are capital intensive, requiring ongoing investment in R&D and infrastructure, making them sensitive to borrowing costs.
- Tesla (TSLA). A pioneer in electric vehicles, benefiting from lower rates due to its high-growth model and global expansion plans.
- Nio (NIO). NIO has positioned itself as a leading player in the EV market, competing with other manufacturers such as Tesla. The company has attracted attention for its innovative approach and commitment to sustainability.
- ChargePoint (CHPT) and Plug Power (PLUG). Companies specialising in electric vehicle charging infrastructure and hydrogen fuel cell technology respectively.
4. Biotechnology and healthcare technology
Lower rates allow these companies to fund their R&D in a more affordable way, often spurring innovation that could lead to breakthrough treatments.
- Moderna (MRNA). Known for its COVID-19 vaccine, it continues to develop mRNA technology for a variety of applications.
- CRISPR Therapeutics (CRSP). A pioneer in gene editing working on treatments for genetic diseases and cancer.
- Teladoc Health (TDOC). A telemedicine leader capitalising on the increased demand for remote medical solutions.
5. E-commerce and digital payments
As consumers increasingly shift to online shopping, e-commerce and fintech companies are well positioned in a low-stakes environment.
- Shopify (SHOP). An e-commerce platform that allows businesses to create online shops and manage e-commerce operations.
- Square (SQ). A digital payments and financial technology company supporting businesses and individual consumers through the Cash App and point of sale systems.
- Affirm Holdings (AFRM). A key player in the emerging consumer credit landscape, focusing on providing affordable and transparent payment solutions that enable consumers to better manage their spending.
6. Semiconductors and chip manufacturers
As data-driven industries such as AI, cloud technology and the Internet of Things expand, semiconductor companies are gearing up for growth.
- Advanced Micro Devices (AMD). Competes with NVIDIA and Intel in high-performance computing, gaming and AI.
- Arm Holdings plc (ARM). A leading technology company, Arm has been recognised for its innovative contribution to the semiconductor industry, particularly in the development of microprocessors and systems-on-chip (SoC).
- Taiwan Semiconductor Manufacturing Company (TSMC). One of the world's largest chip manufacturers, producing advanced processors for leading technology companies.
Freedom24 is the European subsidiary of the NASDAQ-listed Freedom Holding Corp, an international investment group with expertise in the USA, Europe and Central Asia. The group serves 530,000 customers worldwide and has a market cap of approximately $4.8 billion. As an EU-based retail stockbroker, Freedom24 offers access to over 40,000 stocks, 1,500 ETFs, and 800,000 US stock options across major exchanges in the USA, Europe, and Asia.