Back to top

Image: Bigstock

5 Top Growth Stocks to Make the Most of Santa Claus Rally

Read MoreHide Full Article

Wall Street has been on fire since last month. U.S. stock markets have impressed this year, barring a brief period of August to October. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have rallied 11.9%, 22.6% and 40.8%, respectively.

The Fed has set the stage for the much-hyped Santa Claus rally this year in its December FOMC meeting. For three consecutive meetings, the central bank has kept the benchmark lending rate unchanged in the range of 5.25-5.5%. More importantly, the latest dot plot indicated at least three rate cuts of 25 basis points each in 2024.

At this stage, it will be prudent to invest in growth stocks that have strong potential to gain from the year-end rally.

Our Top Picks

We have narrowed our search to five growth stocks that have solid upside left for the rest of 2023. These stocks have witnessed positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Growth Score A. You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks year to date.

Zacks Investment Research
Image Source: Zacks Investment Research

DocuSign Inc. (DOCU - Free Report) provides a cloud-based, e-signature software platform in the United States and internationally that enables businesses to prepare, execute and act on agreements digitally. DOCU offers services to mortgage, non-profit, government, real estate, insurance, technology and healthcare industries.

The acquisitions of Seal Software and Liveoak Technologies are expected to add functionality to DocuSign Agreement Cloud and significantly expand its eNotary offerings. DOCU remains focused on continuously acquiring eSignature customers, improving its offerings, and expanding internationally.

DocuSign has an expected revenue and earnings growth rate of 9.1% and 39.9%, respectively, for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 38.2% over the last seven days.

DaVita Inc. (DVA - Free Report) has been expanding its global presence via its Integrated Kidney Care business. DVA has been generating solid revenues by providing dialysis services. DVA has been opening and acquiring several dialysis centers both within the United States and overseas, which is promising. A strong solvency position is an added plus.

DaVita has an expected revenue and earnings growth rate of 3.3% and 22.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the last 30 days.

Palantir Technologies Inc. (PLTR - Free Report) builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. PLTR provides Palantir Gotham, a software platform that enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants.

Palantir Technologies has an expected revenue and earnings growth rate of 16.5% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for next-year earnings has improved 8.7% over the last 60 days.

Vertiv Holdings Co. (VRT - Free Report) designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. VRT offers hardware, software, analytics and ongoing services.

Vertiv Holdings has an expected revenue and earnings growth rate of 20.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 30 days.

Duolingo Inc. (DUOL - Free Report) operates as a mobile learning platform in the United States, China, the United Kingdom, and internationally. DUOL offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. DUOL also provides a digital language proficiency assessment exam.

Duolingo has an expected revenue and earnings growth rate of 42.6% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 60 days.

Published in