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These Stocks Could Be Your Secret Santa This Christmas

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Wall Street has been on a historic rally with the roll out of the COVID-19 vaccines and Santa on the way. America has started immunizing people with Pfizer (PFE - Free Report) shots developed in collaboration with the German biotechnology company BioNTech (BNTX - Free Report) .

A vaccine will end the pandemic crisis and set the stage for a speedy recovery, thereby boosting demand for several types of products and services in the economy. The increased activity will continue to propel the stock market to new heights. Additionally, a Santa rally would provide further boost to the stocks. A Santa rally refers to the increase in stock prices in the final week of the calendar year (i.e. between Christmas and New Year’s Day) that extends into the first two days of the New Year.

Further, super-easy monetary and fiscal policies adopted by the central bank and the government, and hopes for further stimulus will continue to power the stocks. The Fed has pledged to keep rates at lower levels until the end of 2023. A lower interest rate has provided consumers with extra spending power, which in turn will boost economic activities. Notably, U.S. consumers grew more confident about the economy in early December on prospects of a vaccine. A gauge of U.S. consumer sentiment, as measured by the University of Michigan, climbed to the second-highest level since March to 81.4 from 76.9 in the prior month. Holiday fervor, which has shifted to e-commerce this year, is also adding to the strength.

How to Find Secret Santa Stocks?

While the rally will be broad-based, cyclical sectors — consumer discretionary, financials, energy, materials and industrials — tend to gain the most. As these sectors are closely tied to the economy, they are expected to outperform when economic growth improves. Most notably, the industries hardest hit by the pandemic such as airlines, hotel and casino operators, travel and entertainment-booking companies are expected to be the biggest beneficiaries.

Given this, there are some hidden gems or Secret Santa as we call them that could surprise investors with big returns this Christmas, based on the current trends. We have selected five such stocks from these sectors using our Zacks Stock Screener. These stocks have been in the red over the past month but carry a Zacks Rank #1 (Strong Buy) or 2 (Buy), VGM Score of B or better. Also, these have witnessed positive earnings estimate revisions for the current quarter in a month.

You can see the complete list of today’s Zacks #1 Rank stocks here.

BJs Wholesale Club Holdings Inc. (BJ - Free Report) – Down 11.9%

With a market cap of $5.1 billion, this company operates warehouse clubs on the East Coast of the United States. It offers perishable, edible grocery, general merchandise, and non-edible grocery products, as well as gasoline and other ancillary services. It has seen positive earnings estimate revision of 9 cents for the ongoing quarter in a month. The stock has a Zacks Rank #2 and VGM Score of A.

Gogo Inc. (GOGO - Free Report) – Down 6.1%

It is the leading provider of in-flight connectivity and wireless entertainment solutions for the global aviation industry. The Zacks Consensus Estimate for the current quarter has been narrowed from a loss of 42 cents to a loss of 25 cents over the past month. With a market cap of $850 million, the stock has a Zacks Rank #2 and VGM Score of A.

TRI Pointe Group Inc. (TPH - Free Report) – Down 5.5%

This company is involved in the design, construction and sale of single-family homes. The stock has seen positive earnings estimate revision of a penny for the ongoing holiday quarter in a month and has a market cap of $2.2 billion. TRI Pointe sports a Zacks Rank #1 and has a VGM Score of B.

Penske Automotive Group Inc. (PAG - Free Report) – Down 5%

This company is engaged in the operation of automotive and commercial truck dealerships in the United States, Canada and Western Europe. The stock has seen solid earnings estimate revision of 9 cents for the ongoing quarter over the past 30 days and has a market cap of $4.7 billion. It has a Zacks Rank #1 and VGM Score of A.

Santander Consumer USA Holdings Inc. (SC - Free Report) – Down 2.7%

With a market cap of $7 billion, Santander Consumer is a technology-driven consumer finance company focused on vehicle finance and unsecured consumer lending products. It has seen solid earnings estimate revision of 12 cents in a month and has a Zacks Rank #2. The stock has a VGM Score of A.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>