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5 Stocks to Pop Surprise Returns From Secret Santa
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Wall Street has been on a tumultuous ride ahead of Christmas as recession fears triggered by the re-emergence of the Fed’s hawkish tone and Bank of Japan's surprise shift in monetary policy led to risk-off trading. The weak trend might reverse to end the year, given that there is still a hope for a Santa Claus Rally that would provide a boost to stocks.
Santa Claus 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. Against such a backdrop, there are some hidden gems, or Secret Santa as we call them, that could surprise investors with big returns this Christmas.
The Federal Reserve raised interest rates by 50 bps in its latest meeting and signaled more increases next year to rein in inflation. This marks the seventh rate hike this year. The rate hike takes the benchmark interest rate to 4.25-4.50% — the highest level in 15 years. The move has rekindled fears of recession and has been weighing heavily on the stock market.
The central bank now projects at least 75 bps of rate hike, peaking at 5.1% by the end of 2023, 50 bps higher than the previously projected 4.6% back in September. The rate will then be cut to 4.1% in 2024. Meanwhile, the Bank of Japan made a surprise decision to allow long-term rates to rise to 0.5% from a previous cap of 0.25%. The move ended a long period in which Japan was the only major developed nation not to have increased rates.
However, good tidings have started to flow in, with consumer confidence bouncing back in December to the highest level since April following back-to-back monthly declines, as high inflation continued to ease and gasoline prices dropped. This suggests that Santa might be on the way.
Inflation in the United States is cooling down gradually, underscoring that the worst of inflation has likely passed and the economy will be back on track sooner than expected. This is especially true as the consumer price index jumped 7.1% year over year in November, down from a 7.7% year-over-year increase in October and a recent peak of 9.1% in June. This represents the lowest annual increase since late 2021.
The November jobs report and producer price report came in better than expected. The economy added 263,000 jobs in November, marking another strong month of jobs growth. The unemployment rate remained at 3.7%, close to a 50-year low, while average hourly earnings jumped 0.6% from the prior month and 5.1% from the year-ago month. The producer price index climbed 0.3% for the third month and was up 7.4% from a year ago.
Meanwhile, business activity jumped the most since March 2021 in November, suggesting that the largest part of the economy remains resilient. ISM’s gauge of services rose to 56.5 last month from 54.4 in October. Further, the Santa Claus Rally is supported by year-end seasonal factors such as holiday optimism, tax-related affairs, investment of Christmas bonuses, mutual fund manager window dressing, and the “January effect.”
Here Comes Secret Santa!
Adicet Bio is a biotechnology company engaged in discovering and developing allogeneic gamma delta T cell therapies for cancer and other diseases. It has a market cap of $356.1 million.
Adicet Bio has plunged about 53% over the past month and carries a Zacks Rank #2. It belongs to a top industry rank (in the top 27%) and has a Momentum Score of A.
Enfusion is a provider of cloud-based investment management software and services. Through its software, analytics and middle/back-office managed services, it creates enterprise-wide cultures of real-time, data-driven intelligence, boosting agility and powering growth. With a market cap of $996.8 million, Enfusion belongs to a top industry rank (in the top 24%).
Enfusion carries a Zacks Rank #2 and a Momentum Score of B. The stock is down 30% in a month.
Dillard's is a large departmental store chain featuring fashion apparel and home furnishings. The company also sells its merchandize through the Internet at www.dillards.com. It has a market cap of $5.2 billion.
Dillard's has lost 18.7% over the past month and belongs to the top 14% of the industry rank. It has a Zacks Rank #1 and a Momentum Score of B.
First BanCorp operates as a bank holding company for FirstBank Puerto Rico that provides various financial services for retail, commercial, and institutional clients. The stock has declined 17% in a month.
With a market cap of $2.3 billion, First BanCorp has a solid Zacks Industry rank in the top 13%. FBP has a Zacks Rank #2 and a Momentum Score of A.
Hillenbrand is a global diversified industrial company with multiple market-leading brands that serve a wide variety of industries across the globe. It has a market cap of $2.9 billion.
Hillenbrand has plunged about 15% over the past month and carries a Zacks Rank #1. It belongs to a top industry rank (in the top 17%) and has a Momentum Score of A.
Bottom Line
These stocks could be the winning picks for the next few days, as they are expected to generate higher returns compared to other stocks when Santa arrives in the market.
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5 Stocks to Pop Surprise Returns From Secret Santa
Wall Street has been on a tumultuous ride ahead of Christmas as recession fears triggered by the re-emergence of the Fed’s hawkish tone and Bank of Japan's surprise shift in monetary policy led to risk-off trading. The weak trend might reverse to end the year, given that there is still a hope for a Santa Claus Rally that would provide a boost to stocks.
Santa Claus 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. Against such a backdrop, there are some hidden gems, or Secret Santa as we call them, that could surprise investors with big returns this Christmas.
We have chosen five stocks that have underperformed over the past month but have a Zacks Rank #1 (Strong Buy) or 2 (Buy) with a Momentum Score of B or higher. Some of these are Adicet Bio Inc. (ACET - Free Report) , Enfusion Inc. (ENFN - Free Report) , Dillard's Inc. (DDS - Free Report) , First BanCorp. (FBP - Free Report) and Hillenbrand (HI - Free Report) from different segments of the market. You can see the complete list of today’s Zacks #1 Rank stocks here.
Is Santa on the Way?
The Federal Reserve raised interest rates by 50 bps in its latest meeting and signaled more increases next year to rein in inflation. This marks the seventh rate hike this year. The rate hike takes the benchmark interest rate to 4.25-4.50% — the highest level in 15 years. The move has rekindled fears of recession and has been weighing heavily on the stock market.
The central bank now projects at least 75 bps of rate hike, peaking at 5.1% by the end of 2023, 50 bps higher than the previously projected 4.6% back in September. The rate will then be cut to 4.1% in 2024. Meanwhile, the Bank of Japan made a surprise decision to allow long-term rates to rise to 0.5% from a previous cap of 0.25%. The move ended a long period in which Japan was the only major developed nation not to have increased rates.
However, good tidings have started to flow in, with consumer confidence bouncing back in December to the highest level since April following back-to-back monthly declines, as high inflation continued to ease and gasoline prices dropped. This suggests that Santa might be on the way.
Inflation in the United States is cooling down gradually, underscoring that the worst of inflation has likely passed and the economy will be back on track sooner than expected. This is especially true as the consumer price index jumped 7.1% year over year in November, down from a 7.7% year-over-year increase in October and a recent peak of 9.1% in June. This represents the lowest annual increase since late 2021.
The November jobs report and producer price report came in better than expected. The economy added 263,000 jobs in November, marking another strong month of jobs growth. The unemployment rate remained at 3.7%, close to a 50-year low, while average hourly earnings jumped 0.6% from the prior month and 5.1% from the year-ago month. The producer price index climbed 0.3% for the third month and was up 7.4% from a year ago.
Meanwhile, business activity jumped the most since March 2021 in November, suggesting that the largest part of the economy remains resilient. ISM’s gauge of services rose to 56.5 last month from 54.4 in October. Further, the Santa Claus Rally is supported by year-end seasonal factors such as holiday optimism, tax-related affairs, investment of Christmas bonuses, mutual fund manager window dressing, and the “January effect.”
Here Comes Secret Santa!
Adicet Bio is a biotechnology company engaged in discovering and developing allogeneic gamma delta T cell therapies for cancer and other diseases. It has a market cap of $356.1 million.
Adicet Bio has plunged about 53% over the past month and carries a Zacks Rank #2. It belongs to a top industry rank (in the top 27%) and has a Momentum Score of A.
Enfusion is a provider of cloud-based investment management software and services. Through its software, analytics and middle/back-office managed services, it creates enterprise-wide cultures of real-time, data-driven intelligence, boosting agility and powering growth. With a market cap of $996.8 million, Enfusion belongs to a top industry rank (in the top 24%).
Enfusion carries a Zacks Rank #2 and a Momentum Score of B. The stock is down 30% in a month.
Dillard's is a large departmental store chain featuring fashion apparel and home furnishings. The company also sells its merchandize through the Internet at www.dillards.com. It has a market cap of $5.2 billion.
Dillard's has lost 18.7% over the past month and belongs to the top 14% of the industry rank. It has a Zacks Rank #1 and a Momentum Score of B.
First BanCorp operates as a bank holding company for FirstBank Puerto Rico that provides various financial services for retail, commercial, and institutional clients. The stock has declined 17% in a month.
With a market cap of $2.3 billion, First BanCorp has a solid Zacks Industry rank in the top 13%. FBP has a Zacks Rank #2 and a Momentum Score of A.
Hillenbrand is a global diversified industrial company with multiple market-leading brands that serve a wide variety of industries across the globe. It has a market cap of $2.9 billion.
Hillenbrand has plunged about 15% over the past month and carries a Zacks Rank #1. It belongs to a top industry rank (in the top 17%) and has a Momentum Score of A.
Bottom Line
These stocks could be the winning picks for the next few days, as they are expected to generate higher returns compared to other stocks when Santa arrives in the market.