5 ASX stocks to buy after rate cuts

With the RBA having delivered another rate cut (the 3rd of the current cycle), we would imagine investors are thinking about what ASX stocks to buy after rate cuts. There are plenty of sectors that will benefit including REITs and other property stocks, small and micro-caps generally, construction stocks, technology and consumer discretionary.

But this only gives a general guidance as to what particular companies will benefit. Some need a lift more than others, and we’d like to single out 5 that we think will be major beneficiaries.

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5 ASX stocks to buy after rate cuts!

Baby Bunting (ASX:BBN)

As interest rates rose cash-strapped new parents turned away from Australia’s largest specialty nursery retailer and one-stop-baby shop and to outlets like Big W and Target with lower prices. This was to the detriment of the company’s bottom line and shares shed 80% of their value from April 2021 to June 2023.

A rate cut will mean parents with mortgages will have more money to spend and this will flow through to the top and bottom lines. Moreover, it will also give the company more room to invest in growing its market share. The company has a store optimisation plan involving opening new stores where there’s an opportunity and either renegotiating leases or closing down at unprofitable outlets

Mirvac (ASX:MGR)

Mirvac is one of Australia’s property giants with an investment portfolio over $10bn. The company has had a focus on high density residential/commercial projects in inner cities – both Build to Rent (BTR) outlets and sold lots. We’ve long been big on the BTR sector and Mirvac is a first mover here. After a slow start, we reckon things are on track now.

Of course, the property industry runs on debt finance and rate cuts mean the cost of borrowing will go down. This means the cost of borrowing will be lower, and perhaps property developers like Mirvac will be able to borrow more money where needed.

MAAS Group (ASX:MGH)

Maas Group is an industrial company that offers property development services, construction materials and equipment. Maas’ clients include regional councils, state governments and several key construction companies, including Lendlease and Fulton Hogan. Projects to which Maas has contributed include the WestConnex, the Brisbane Cross River Rail and the Melbourne Metro Tunnel – in each instance providing equipment. But it also undertakes work in regional areas, especially in NSW.  

Remember what we said in relation to Mirvac that lower rates will reduce the cost of borrowing and thus make it more appealing? We imagine this will happen with respect to Maas too. It will also improve construction industry sentiment – this may need more than rate cuts to happen, but rate cuts would be a good start.

Judo (ASX:JDO)

Judo is Australia’s first ‘challenger’ bank for Small and Medium-sized Enterprises (SMEs). It became the first challenger bank to get a full license in 25 years when it obtained its license just prior to CVID, and it listed in 2019. Judo is picky with who it does business with, turning down roughly half of would-be customers. Those it does business with are resilient to rising interest rates and tend to be able to repay loans from core operations.

The company already expects FY25 to be a strong year, expecting $12.4-16.2bn GLA, a 2.8-2.9% NIM and for 15% pre-tax profit growth. But FY26 could see even further growth as rate cuts put finance in reach of companies that may have found it to be out of reach when rates peaked.

Eagers Automotive (ASX:APE)

After housing, cars are the asset that most people take up with debt. Because cars are quickly depreciating assets (except certain vintage cars), why not? The company arguably doesn’t need a rate cut given its record results in CY25, with $11.2bn revenue, a >$300m profit (both statutory and underlying) and a 3.3% Return on Sales. But falling rates will help grow customer numbers and also give the company greater capacity to reinvest into itself.