More Interest Rate Cuts Ahead: 5 Growth Stocks to Benefit

Economic Environment - Wall Street anticipates further cuts in the Fed's benchmark lending rate, with a 100% probability of a 25-basis point cut in November and a total year-to-date cut of 1% by December [1] - The current Fed fund rate is between 4.75-5%, following a significant cut of 50 basis points in September, marking the first reduction since March 2020 [1] Growth Stocks - Investment in growth stocks is expected to be fruitful, with five highlighted stocks: AppLovin Corp. (APP), Duolingo Inc. (DUOL), Paramount Global (PARAA), Twilio Inc. (TWLO), and Catalent Inc. (CTLT) [2] - Growth investors focus on stocks with aggressive earnings or revenue growth, which are likely to see stock price increases due to reduced production costs from rate cuts [2] AppLovin Corp. (APP) - AppLovin reported a 76% year-over-year revenue increase in 2023 and a 44% year-over-year revenue jump in Q2 2024, alongside a 286% increase in net income [4] - The company has an expected revenue growth rate of 35.2% and earnings growth rate of over 100% for the current year, with positive earnings estimate revisions in the last 60 days [5] Duolingo Inc. (DUOL) - Duolingo operates a mobile learning platform offering courses in 40 languages and has seen an expected revenue growth rate of 38.6% and earnings growth rate of over 100% for the current year [7][8] - Positive earnings estimate revisions have occurred for the current quarter and next year in the last 30 days [8] Paramount Global (PARAA) - Paramount Global operates in media, streaming, and entertainment, with an expected earnings growth rate of over 100% for the current year, despite a negative revenue growth rate [10][12] - The Zacks Consensus Estimate for earnings has improved over the last 60 days [12] Twilio Inc. (TWLO) - Twilio is benefiting from digital transformations and has an expected revenue growth rate of 5.2% and earnings growth rate of 39.2% for the current year [14][15] - The company has seen improvements in earnings estimates over the last 60 days [15] Catalent Inc. (CTLT) - Catalent's impending buyout by Novo Holdings is expected to enhance its business investments, with a projected revenue growth rate of 8.1% and earnings growth rate of over 100% for the current year [17][18] - The company reported nearly 30% growth in non-COVID revenues during the fourth quarter of fiscal 2024 [17]