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7 Stocks That are Ready For a Santa Claus Rally

Posted on Thursday, December 2nd, 2021 by MarketBeat Staff
7 Stocks That are Ready For a Santa Claus RallyWith the end of the year approaching, many investors are looking to rebalance their portfolios. That typically means casting a critical eye at some of your strong performers and making a decision on whether they will move higher. And one thing that can dip the balance in favor of retaining a stock is the likelihood of a Santa Claus rally.

The technical definition of a Santa Claus rally is a rally that starts in the last few trading days of the year after the Christmas holiday. In recent years, however, that definition has been expanded to take into account a December rally. And with Black Friday beginning earlier and earlier and really not ending until after the holiday's end, this makes some sense.

So will there be a rally in 2021? I wouldn’t bet against it. The market continues to want to move higher and January is historically a strong month for stocks. With that said, we believe quality should still matter. Here are seven stocks that stand to benefit with or without a Santa Claus rally.

#1 - Walmart (NYSE:WMT)

Walmart logo

One potential indicator that a Santa Claus rally is in the offing is that consumers are spending even in the face of inflation. However, that doesn’t mean that they are spending recklessly. The “everyday low prices” of Walmart (NYSE:WMT) will always be in demand. And that makes WMT stock an appealing choice to rally by the end of the year. 

The retailer is saying that it has been able to manage its supply chain as effectively as possible and that means that its shelves should be full this holiday season. If that’s the case, it’s likely that Walmart will continue its pattern of saving the best for last, at least in terms of its revenue numbers. And if that happens, WMT stock is likely to move significantly higher. 

The consensus estimate shows the stock as having a 17% upside. However, investors should note that if the stock hits that level it will be a new 52-week high which is typically a bullish indicator. 

About Walmart

Walmart, Inc engages in retail and wholesale business. The Company offers an assortment of merchandise and services at everyday low prices. It operates through the following business segments: Walmart U.S., Walmart International, and Sam's Club. The Walmart U.S. segment operates as a merchandiser of consumer products, operating under the Walmart, Wal-Mart, and Walmart Neighborhood Market brands, as well as walmart.com and other eCommerce brands.Read More 
Current Price
$137.73
Consensus Rating
Buy
Ratings Breakdown
16 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$171.61 (24.6% Upside)




#2 - Etsy (NASDAQ:ETSY)

Etsy logo

Moving to a retailer of a different sort brings us to Etsy (NASDAQ:ETSY). The online marketplace was one of the biggest gainers in 2020 as many individuals turned their hobby into a side hustle or even a small business. But what may have caught some investors by surprise is that ETSY stock has grown legs

Nobody expected ETSY stock to repeat the 461% growth it showed in 2020. However, the company has managed more-than-respectable 58% growth that easily outpaces the S&P 500. 

Obviously, growth of this magnitude may make some investors skeptical about the company’s ability to continue to deliver the goods. Perhaps growth will slow down. But one interesting data point in the company’s last earnings report should pique the interest of investors. The company had 8 million of what they refer to as “habitual buyers” defined as customers who have purchased on 6 or more days and have spent $200 or more in the trailing twelve months. That suggests that the company has a loyal base that will keep revenue sticky. 

About Etsy

Etsy, Inc engages in the operation of online marketplace. It offers handmade products such as shoes, clothing, bags, and accessories. It operates through the following geographical segments: United States, United Kingdom, and Other International. The company was founded by Haim Schoppik, Robert Kalin, Jared Tarbell, and Christopher Maguires in 2005 and is headquartered in New York, NY.
Current Price
$149.37
Consensus Rating
Buy
Ratings Breakdown
15 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
Consensus Price Target
$244.67 (63.8% Upside)




#3 - Apple (NASDAQ:AAPL)

Apple logo

The tech sector remains volatile, but it also remains one of the most attractive growth sectors in the market today. Apple (NASDAQ:AAPL) is a good example of this risk/reward dynamic. The company posted a disappointing third-quarter earnings report with guidance that suggested it is not immune from supply chain disruptions

However, the revenue “miss” was still $83.4 billion higher than in the same quarter in the prior year. And much of that growth came from its Services category which continues to prove that Apple is more than its iPhone. The company is proving this in other ways, notably its plans to develop an augmented reality headset that would position it for the metaverse as well as the company’s vision for an electric vehicle. 

And remember, the fourth quarter is historically the company’s strongest in terms of revenue. This year is likely to be no different as the holiday season will likely drive sales of the company’s iPhone, Apple Watch, and other devices. 

About Apple

Apple, Inc engages in the design, manufacture, and sale of smartphones, personal computers, tablets, wearables and accessories, and other variety of related services. It operates through the following geographical segments: Americas, Europe, Greater China, Japan, and Rest of Asia Pacific. The Americas segment includes North and South America.Read More 
Current Price
$162.92
Consensus Rating
Buy
Ratings Breakdown
25 Buy Ratings, 5 Hold Ratings, 1 Sell Ratings.
Consensus Price Target
$178.83 (9.8% Upside)




#4 - Chevron (NYSE:CVX)

Chevron logo

We’ve been saying all year that the current debate between renewable energy on the one hand and traditional fossil fuel on the other is an unwise distraction. The United States still needs both and investors should be investing accordingly. And that’s the bullish case for Chevron (NYSE:CVX)

Savvy investors who bought the dip in CVX stock in September have been rewarded with a 22% gain. And it looks like the stock is just getting warmed up. Morgan Stanley (NYSE:MS) recently boosted its price target for the stock to $155. That would be a 26% gain from the consensus target of analysts.

Chevron is not just a legacy big oil company, but they have one of the strongest alternative energy portfolios in the industry. And another factor to consider is the company’s quarterly dividend which it now pays out an attractive $5.84 annually. Chevron is part of the exclusive Dividend Aristocrat club having raised its dividend for the last 34 years. 

About Chevron

Chevron Corp. engages in the provision of administrative, financial management, and technology support for energy and chemical operations. It operates through the Upstream and Downstream segments. The Upstream segment consists of exploration, development, and production of crude oil and natural gas; liquefaction, transportation, and regasification associated with liquefied natural gas; transporting crude oil by major international oil export pipelines; processing, transporting, storage, and marketing of natural gas; and a gas-to-liquids plant.Read More 
Current Price
$134.01
Consensus Rating
Buy
Ratings Breakdown
17 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$128.90 (3.8% Downside)




#5 - Booz Allen Hamilton (NYSE:BAH)

Booz Allen Hamilton logo

Booz Allen Hamilton (NYSE:BAH) is a consultant for public and private sector organizations and nonprofits. The company’s stock has been a disappointment since it surged in January. However, there are indications that may be changing. BAH stock confirmed a level of support in October and has been climbing higher ever since. 

The stock is still basically flat for the year. However, recent analyst ratings paint a more bullish picture for the stock. Some of that may be due to the company’s recent contract with the United States Air Force to commercialize Platform One, the Federal Government’s first DevSecOps enterprise-level service. This also positions the company at the forefront of the Department of Defense list of contractors who can modernize the department’s enterprise-wide software. 

BAH may also be an overlooked dividend stock. The company has boosted its dividend for the last 9 years and has posted three-year dividend growth of over 82%. With a payout ratio of 34% the dividend looks safe and likely to continue growing. 

About Booz Allen Hamilton

Booz Allen Hamilton Holding Corp. engages in the provision of management and technology consulting services. It offers analytics, digital solutions, engineering, and cyber expertise. The company was founded by Edwin Booz in 1914 and is headquartered in McLean, VA.
Current Price
$85.31
Consensus Rating
Buy
Ratings Breakdown
5 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$99.80 (17.0% Upside)




#6 - RingCentral (NYSE:RNG)

RingCentral logo

On November 22, Zoom Communications (NASDAQ:ZM) lowered its forward guidance, and analysts are lowering their price targets for ZM stock. This doesn’t mean that there’s no need for videoconferencing. It just means that the competition has had time to catch up. And one of those competitors is RingCentral (NYSE:RNG)

RingCentral posted strong quarterly earnings in mid-November and raised its outlook for future earnings, largely based on its business model which includes predictable subscription revenue. Not surprisingly, analysts have raised their price targets for RNG stock. And at the time of this writing, the stock had an upside of over 92%. 

However, recent price action has been bearish. After popping 20% higher after earnings, RNG stock has dropped 26% and is now trading near its 52-week low. But the recent sell-off in RNG stock now appears to be moving into an area that has shown strong support. If that pattern holds, opportunistic investors can look at buying into a rally. With that said, RNG does carry a high amount of short interest and there is a sentiment that a short squeeze may be emerging. Risk-averse investors may want to wait for bullish confirmation.

About RingCentral

RingCentral, Inc engages in the provision of global enterprise cloud communications and collaboration solutions. The firm's solutions provide a single user identity across multiple locations and devices, including smartphones, tablets, PCs and desk phones; and allow for communication across multiple modes, including high-definition voice, video, SMS, messaging and collaboration, conferencing, online meetings and fax.Read More 
Current Price
$161.70
Consensus Rating
Buy
Ratings Breakdown
16 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$362.67 (124.3% Upside)




#7 - Chipotle Mexican Grill (NYSE:CMG)

Chipotle Mexican Grill logo

The last stock on our list is Chipotle Mexican Grill (NYSE:CMG). Investors have taking profits lately, but the selloff is beginning to look overdone. And with a consensus price target that suggests an upside of nearly 20%, it may be time to take a look at CMG stock. 

Some investors may contend that Chipotle will have a difficult time sustaining earnings growth with higher labor costs and stories of employees walking out due to high-stress working conditions. The company has also acknowledged that it is being affected by supply chain issues. 

Both of those may certainly be a factor. However, if they are, Chipotle is not alone in having those problems. And the company was investing in digital ordering long before the pandemic. Plus, the company is still planning on opening more stores which is perhaps the strongest indicator that demand remains strong.

Does that mean it’s worth its current valuation? That’s for you to decide. But Wall Street believes in the company so you may use this dip as a buying opportunity.

About Chipotle Mexican Grill

Chipotle Mexican Grill, Inc engages in the development and operation of classically-cooked, real food with wholesome ingredients without artificial colors, flavors or preservatives. It offers focused menu of burritos, tacos, burrito bowls, and salads prepared using classic cooking methods. The company was founded by Steve Ells in 1993 and is headquartered in Newport Beach, CA.
Current Price
$1,413.24
Consensus Rating
Buy
Ratings Breakdown
22 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$1,982.52 (40.3% Upside)



 

Trying to time the market is a fool’s errand. And over time, the efficient market theory holds up to scrutiny.

However, investing in observable trends is not market timing; it’s just common sense. And a Santa Claus rally is a trend that has occurred more often than not. One reason to believe it will re-occur in 2021 is the strength of the retail investor.

They aren’t likely to take a holiday when there are gains to be made. And with institutional investors stepping away for a few days, these investors will be more than happy to drive up the price on some of their favorite stocks.

And investors should also keep in mind that the act of investors rebalancing their portfolios is theorized to be one reason for the January Effect, a theoretical observation that stocks tend to rise in January.

The bottom line is that the last trading month of the year is a time when investors can take advantage of price anomalies and position their portfolio for the year to come.

7 Great Biotech Stocks to Buy in Expectations of Better Days Ahead

The biotechnology (biotech) sector was one of the best performing sectors in 2020. Many companies saw their stock prices rise as the race was on for a Covid-19 vaccine.

However, many of these companies were pre-revenue companies. Or they were companies that only had one or two in-market products or therapies. And as the calendar turned to 2021, investors took notice. And what went up quickly went down. And in the case of the biotech sector, it came down hard.

One way to tell is to look at biotech ETFs. One of the most popular ETFs, the VanEck Vectors Biotech ETF (NYSEARCA:BBH) is down more than 15%. So you can imagine what it’s been like for many individual biotech stocks. If you’re a buy-and-hold investor, you’re licking some wounds right about now.

But investors who knew what companies to buy have done well. And many of those names will continue to lead the biotech sector in 2022. In this special presentation, we give investors seven biotech stocks that represent different aspects of this diverse sector. We’re confident there’s something for investors of all risk tolerances.

View the "7 Great Biotech Stocks to Buy in Expectations of Better Days Ahead" Here.





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