Watchlist Update: How the Fed Could Supercharge Redfin's Rally

Shares of online real estate platform Redfin (RDFN) have more than doubled since the beginning of November. But I think the disruptive small-cap stock’s rally might just be getting started.

Redfin’s impressive run kicked off last month after it announced solid third-quarter results in spite of immense headwinds facing the U.S. housing market. Though its quarterly revenue unsurprisingly fell 12% year over year, the company also swung to an adjusted EBITDA profit while simultaneously gaining market share from competitors.

“This downturn has only made us stronger,” mused Redfin CEO Glenn Kelman.

So why do I think Redfin’s quick double could be just the beginning? Look no further than the U.S. Federal Reserve’s indication last week that at least three interest-rate reductions are on the docket for 2024.

To be clear, the Fed doesn’t directly control mortgage rates. But its management of the central bank’s federal funds rate absolutely influences mortgage lenders as they determine how much interest to charge on their loans.

Sure enough, last week mortgage rates fell to below 7% for the first time since July in response to the Fed news. Redfin followed yesterday to report the shift has lured sellers off the sidelines to drive the biggest percent increase in new home listings since mid-2021. 

If these trends continue in 2024, Redfin will be perfectly positioned to capitalize.

• Redfin stock is still down 90% from its 2021 highs even after its recent rally. We can’t reasonably expect it to reclaim those highs in the near future, but I think it remains a multibagger in the making for patient investors who open or add to their positions today.

• Rocket Lab’s Massive New Contract: Fellow BLI Watchlist constituent Rocket Lab (RLKB) popped 23% on Thursday after the company won a $515 million contract to build, deliver, and operate 18 space vehicles for an unnamed U.S. government customer. Not too shabby considering Rocket Lab’s entire market cap stands at $2.64 billion today.
  
  The contract includes a base of $489 million, plus incentives and options totaling $26 million. Rocket Lab says work under the agreement will begin immediately with delivery of the space vehicles to the customer for launch slated for 2027, operation of the satellites through 2030, and an option to operate them through 2033.
  

• A Surprising Partner for StoneCo: Brazilian fintech company StoneCo (STNE) appears to be priming itself for accelerated growth and profitability with the help of a surprising partner: The U.S. government.
  
  Earlier this week, StoneCo announced a new $467.5 million revolving credit facility from the United States International Development Finance Corporation (DFC), an agency of the U.S. government. StoneCo will use the proceeds from the new facility to help its micro, small, and medium-sized business (MSMB) clients scale by enabling installment sales — which represent around 80% of all e-commerce transactions in Brazil — with immediate liquidity.
  

• Future Cardia Hits $2 million: Fresh on the heels of the first successful human implants of its cardiac monitor device last week, on Monday Future Cardia reached $2 million raised from 1500 investors through its RegCF offering on StartEngine.

  
  There are still a few weeks left to participate in that round, as the deadline is Jan. 17, 2024. So if you’re considering whether to make it part of your portfolio, feel free to read our premium report on Future Cardia here.