Barron's has named eight small-cap stocks that are set to "pop" on the Fed decision today, when it's "almost a given" that the Fed will cut rates by 25 basis points. Small caps have lesser ability to navigate treacherous economic and financial conditions, meaning their stock prices have more to lose on the downside and more to gain on the upside. Barron's looked for names that have gained even more than the Russell 2000 since August 1, are in economically sensitive sectors (e.g., communications, commodities, oil and gas, tech, and industrial), and have climbed more on the back of economic expectations and less on their own earnings reports.

Stock picks

  • Beazer Homes USA: A builder of private homes (market capitalization $775.2 million, up 20.1% since August 1). It reported a net loss of $324,000 for the third fiscal quarter, versus a profit a year earlier. Shares dipped after the results but later rose on rate-cut expectations, Barron’s writes.

  • Toll Brothers: A construction company (market cap $13.60 billion, up 15.9% since August 1). Quarterly earnings were flat year over year in the last quarter at $369.6 million. The stock slipped after the financials but soon rebounded.

  • KB Home: Another construction market player (market cap $4.45 billion, up 14.0% since August 1). It last reported in June, meaning the August share price growth reflects investor expectations rather than the financials, Barron’s notes.

  • Banc of California: A regional bank (market cap $2.59 billion, up 15.9% since August 1)

  • Western Alliance Bancorp: A regional bank (market cap $9.60 billion, up 14.3% since August 1)

  • JetBlue Airways: An airline (market cap $1.84 billion, up 18.7% since August 1)

  • Alaska Air Group: A peer airline (market cap $6.60 billion, up 9.5% since August 1). The share price performance has lagged the Russell 2000, but yesterday, September 16, the day the Barron’s article was published, the stock outperformed the index.

  • Kohl’s Corporation: A retailer (market cap $1.87 billion, up 55.0% since August 1). It reported results at end-August, but most of the gain since August 1 came before the release, Barron’s notes.

The AI translation of this story was reviewed by a human editor.

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