These stocks have the most to gain if interest rates keep going down

Published Thu, Nov 16 202310:01 AM EST

Cooler-than-expected inflation data could push stocks higher, especially those that benefit the most from a decline in the cost of money. The October consumer price index report showed no change for the month, advancing 3.2% year-over-year, the Labor Department said on Tuesday. Core CPI, which excludes volatile food and energy prices, expanded 0.2% last month and 4% year-over-year. Both readings were below Wall Street estimates, underpinning a rally in 10-year Treasurys that drove yields below 4.5% and the Dow Jones Industrial Average up by nearly 500 points. The cooler inflation report brightened investor hopes that the Federal Reserve will soon have ample cause to end its monetary tightening campaign and start cutting benchmark lending rates in 2024, lowering Treasury yields in the process. Some stocks that have heavy debt loads, however, stand to benefit the most when the cost of raising new capital and rolling over old debt declines. CNBC screened both FactSet and LSEG, formerly Refinitiv, for stocks that could advance as a result of meeting the following criteria: Stocks are members of the Russell 1000 Shares have a debt-to-equity ratio of more than 0.82, the median for the Russell 1000 Average analyst price targets imply more than 25% upside Shares have a 50-day correlation to the iShares 7-10 Year Treasury Bond ETF of more than 0.25 Casino operators MGM International and Caesars Entertainment both made the list with 50-day correlations to the IEF of 0.34 each. MGM maintains a 705.4 debt-to-equity ratio, the highest on the list, while Caesars holds a 703.9 rating. Average forecasts from analysts imply about 35% upside for MGM International and more than 38% for Caesars. MGM stock has added more than 21% from the start of the year, while Caesars has climbed about 11%. MGM CZR YTD mountain Both casino stocks have trended higher thanks to a tentative agreement with the Las Vegas hotel workers union earlier in November. Both MGM and Caesars made headlines earlier in November after each company reached a tentative agreement with the Las Vegas hotel workers union to avoid a strike that would apply to about 25,000 employees. Elsewhere, Solar Battery company SunRun also made the cut, and average analysts polled by FactSet/Refinitiv implies nearly 89% upside moving forward. The company has a debt-to-equity reading of 132.2 as well as a 0.256 50-day correlation to the IEF. Shares have pulled back more than 52% from the start of the year as higher interest rates pressure the overall solar sector . RUN YTD mountain SunRun stock. BMO Capital Markets downgraded SunRun stock earlier this month to market perform from outperform, but still noted the company's "cautious approach to residential solar growth compared with its rooftop solar peers" still remains a positive catalyst overall. Other names that made the cut include broadcast satellite provider Dish Network and utilities company AES Corporation .