3 Potential Rate Cut Winners for Your Portfolio
Every investor is preparing for the United States Federal Reserve to cut interest rates in September 2025, which will shift the fundamental makeup of the entire S&P 500. While the most popular names today may continue to rise, other logical ways exist to create additional upside in a specific group of companies that will benefit even more from lower interest rates.
These companies have above-average leverage on their balance sheets, considering that the amounts paid on that debt will be much lower when interest rates come down, directly expanding the amount of retained earnings per share (EPS) and valuations.
Therefore, a screener that adds these types of businesses could work very well for investors in the coming months and quarters.
Some of these include names like Boeing Co. (NYSE: BA), Starbucks Corp. (NASDAQ: SBUX), and Domino’s Pizza Inc. (NASDAQ: DPZ). With direct exposure to consumer discretionary sector trends through more traveling and consumption, these highly leveraged businesses could see higher prices in the short-term as the narrative shifts to preference for this EPS expansion due to lower rates.
Boeing’s Double Tailwind Has Bears Running
Over the past month, 11.5% of Boeing’s short interest declined to show retail investors an initial sign of bearish capitulation, coupled with the stock’s run of 29.6% on a year-to-date basis. This momentum is driven by the fact that travel demand is returning, a trend evident in Boeing’s latest figures for new orders.
In addition to this demand tailwind, which could accelerate with lower interest rates, allowing consumers to afford more travel plans, the company’s debt level is the ace up its sleeve to play out in future EPS growth, potentially bringing a new 52-week high.
With $207.5 billion of long-term debt reported in Boeing’s balance sheet, and $28.2 billion in interest expenses on that debt, a few billion of cost savings could trickle down into the company’s earnings by the time the Fed acts on this lower rate decision.
That might be why the EPS consensus forecast reflects a net 80 cents in EPS for the second quarter of 2026, a significant increase from today’s reported loss of $1.24 per share. This massive jump in profitability, with these long-term tailwinds still in place, should be enough to give investors a new 52-week price for Boeing stock.
Starbucks Is Preparing a Comeback
As the price of coffee futures neared the highs made earlier in the year, some investors decided to step away from Starbucks stock during this period, which is why it now trades at only 73% of its 52-week highs. That said, the ceiling is much higher going into this rate cut scenario.
Lower interest rates have traditionally increased consumer spending, and Starbucks remains in a resilient market unlikely to disappear soon—coffee. Not only is this a non-cyclical consumption area, but Starbucks itself has become an icon of a brand in society, where people know the reliability and consistency offered in its products.
A surprise factor, however, could come straight out of the company’s balance sheet, as it is made up of net debt. Approximately 138% of the company’s capital is comprised of debt, totaling $14.5 billion, resulting in $536.8 million in interest expenses and a direct cost-reduction opportunity to drive EPS higher in the future.
Just like Boeing, Starbucks is expected to report a significantly higher EPS of 74 cents in the third quarter of 2025, according to MarketBeat’s consensus, a 48% increase from the 50 cents reported today. This would explain why Corient Private Wealth started a position of $553.2 million as of mid-August 2025, reflecting this institution’s optimism.
The Best Transition Name: Domino’s Pizza
There will be an adjustment period between where the consumer is today, focused on worrying about inflation and budgeting, and feeling the ease of lower rates, allowing them to resume high-ticket spending. For this reason, Domino’s Pizza could be the perfect middle ground in this adjustment period.
Pizza is still a discretionary item, but not a plane ticket, so it falls into the same consumer tailwind category as Starbucks. With up to 421% of the company’s capital in debt totaling $3.8 billion, the fundamentals indicate a potential opportunity for further cost reduction in this lower interest rate environment.
The same trend of EPS expansion has also trickled into Domino’s Pizza. Investors can consider the MarketBeat consensus forecast of $5.62 in EPS for the fourth quarter of 2025, representing a 47.5% increase from today’s $3.81 in earnings.
There’s no denying it; leverage, combined with a new awakening among American consumers, makes these stocks clear winners.
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