3 Financial Stocks to Grab on a Slowdown in 2025 Rate Cuts

The Federal Open Market Committee (“FOMC”) is not expected to change interest rates at its March meeting based on a robust jobs market and higher-than-expected inflation. In fact, if one is to go by the minutes from the FOMC’s last meeting in January, any cuts, if at all, may come in the second half of 2025. Additionally, Fed Chair Jerome Powell said in his congressional testimony on Feb. 11, “If the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer.”This strongly indicates that interest rates are not going to come down rapidly. In such an environment, stocks like Barclays PLC BCS, EZCORP, Inc. EZPW and United Fire Group, Inc. UFCS become viable investment options.When interest rates are relatively high, banks and other financial institutions generally see increased profitability due to increased lending rates. The gap between such lending rates is considered a long-term asset for banks. Also, short-term liabilities such as deposits increase and boost net interest margins.Bank stocks, insurance companies and other financial institutions go up with continuous interest rate hikes. This is because financial services companies can earn more on their money and the credit they issue to their customers.The sector has been a strong performer in 2024, delivering solid returns. Early concerns in the year about the collapse of several small to mid-cap banks were overshadowed by optimism about an improving economy and lower borrowing costs. It has continued to prosper in 2025, with the S&P 500 Financials Select Sector SPDR (XLF) soaring 19.9% year to date as of Feb. 24.Also, financial stocks are very popular investments on their own. Most companies within the sector issue dividends and are judged on the overall strength of their financial health. It is thus prudent to add a few to one’s portfolio.Our ChoicesThe stocks below flaunt a Zacks Rank #1 (Strong Buy) or Rank #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.Barclays PLC is a financial products and services company. BCS’ expected earnings growth rate for the current year is 8.7%. The Zacks Consensus Estimate for its current-year earnings has improved 29% over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.EZCORP, Inc. is a pawn services company. EZPW’s expected earnings growth rate for the current year is 16.1%. The Zacks Consensus Estimate for its current-year earnings has improved 3.2% over the past 60 days. This Zacks Rank #2 company has a VGM Score of A.United Fire Group, Inc. is a property and casualty insurance company. UFCS’ expected earnings growth rate for the next year is 9.5%. The Zacks Consensus Estimate for its current-year earnings has improved 10% over the past 60 days. This Zacks Rank #1 company has a VGM Score of A.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Barclays PLC (BCS): Free Stock Analysis Report EZCORP, Inc. (EZPW): Free Stock Analysis Report United Fire Group, Inc (UFCS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks