Investors should consider investing in powersports and RV stocks in the event that the Federal Reserve cuts the federal funds rate at the conclusion of its two-day policy meeting on Wednesday, according to Citi. “Powersports/leisure vehicles have far and away been the biggest victims of the ‘higher-for-longer’ rate regime, and stand to gain the most in a falling rate environment,” analyst James Hardiman wrote in a note dated Tuesday. The analyst added that RV names like Thor Industries , Winnebago Industries and Camping World Holdings as well as boat names such as Brunswick Corp and MarineMax are “companies perceived to be the most direct ways to play the rate-cut trade, a perception that we agree with in so far as we see meaningful movement in long rates (esp. the 10-year) and not just the Fed Funds rate.” Among those names, Thor and Brunswick are standouts, Hardiman said, as they’ve respectively soared more than 24% and more than 20% in the last three months on the view that they’re “strong rate proxies.” The S & P 500 , by comparison, has jumped more than 10% in that timeframe. THO BC 3M mountain THO vs. BC, 3-month This comes after powersports were key movers in the rate trade in 2024. In the leadup to the Fed’s half-point rate cut in September of that year, RV and boat names were up between 4% and 32%, more than the S & P 500’s 3% gain at that time, the analyst noted. However, he also said that when that cut didn’t lead to reductions in the 10-year Treasury yield , the stocks sold off, dropping to between 3% and 13% in the three months after the cut compared to the 7% rise in the S & P in that period. So watching the reaction in the 10-year yield this afternoon will be key. While Hardiman anticipates five consecutive quarter percentage point cuts from the Fed starting Wednesday, the year-end view for the benchmark 10-year yield is that it will be up 5 basis points by that time. With that, he said that Camping World Holdings and MarineMax are the most direct beneficiaries of reductions in short-term rates, based on “wholesale financing exposure, while also being names that don’t appear to have been bid up in anticipation of this week’s news.”