As the Christmas festive season twinkles on the horizon, a wave of optimism traditionally sweeps through Wall Street, heralding what is fondly known as the Santa Claus Rally. This time-honored market trend, first identified by Yale Hirsch in his seminal 1972 work, “The Stock Trader’s Almanac,” offers a glimmer of hope and potentially lucrative opportunities for investors. Characterized by a noticeable uptick in stock prices towards the year’s end, the Santa Claus Rally has been a consistent feature of the financial landscape, occurring in approximately 76% of the years from 1950 to 2019.
The Santa Claus Rally 2023
As the curtain begins to close on 2023, investors’ minds turn not only to reflections on the year’s financial maneuvers but also to astute planning for the upcoming 2024.
In this article, we will overview three stocks, each holding a beacon of potential in the anticipated Santa Claus Rally. However, note that these selections stand out not for speculative frenzy but for their solid business foundations, offering a more grounded approach in the often whimsical world of stock trading.
Moreover, it is crucial to acknowledge the shadows lurking in the market landscape. Various fundamental factors could still cast a pall over stock growth as 2023 winds down. Yet, the market, ever a creature of complexity, often has the foresight to incorporate these nuances into its valuations.
Top 3 stocks to buy before the Santa Claus Rally 2023
1. Nvidia Corp (NVDA)
In the dynamic world of stocks, Nvidia’s shares have become a dazzling star in the financial galaxy. Throughout 2023, this tech titan’s stock price did not just climb—it soared, outpacing even the most optimistic forecasts. The secret sauce? A booming AI sector, where Nvidia plays a pivotal role, sparking excitement among market mavens about its future potential.
Nvidia stands out as a leading performer with an enviable IBD Composite Rating of 99, placing it in the upper echelon of market players based on price performance. This year, it has leaped a staggering 245%—a testament to its financial prowess.
But what really makes Nvidia shine is its financial health. Its Earnings Per Share (EPS) Rating stands at a robust 93, backed by a track record of impressive earnings growth. Over recent quarters, the company’s EPS ballooned by an average of 125%, far surpassing the CAN SLIM benchmark of 25%.
It is no surprise that Nvidia has earned its place in the prestigious IBD 50 list, a recognition reserved for the best stocks, determined by proven, time-tested criteria.
At the heart of Nvidia’s success is its dominance in the AI chip market. The tech giant is rumored to unveil its next-gen AI super chip, the GH200, in the near future, signaling continued innovation and drive.
It is noteworthy that Nvidia’s journey over the last three decades is nothing short of a stock market fairy tale. From 1990 to 2020, it generated a staggering $309.4 billion in shareholder wealth, boasting an annualized return of nearly 28%.
And now, even as the stock has tripled in value in 2023, Wall Street’s enthusiasm remains undimmed. Among 53 analysts surveyed, the majority are beating the drum for Nvidia, with an overwhelming consensus leaning towards a ‘Strong Buy’ rating.
2. Riot platforms (RIOT)
In the domain of Bitcoin mining, Riot Platforms emerges as a standout thread, weaving a story of potential and resilience. In case Bitcoin ascends toward new heights in the coming period, RIOT could see its value soar twofold, echoing the merry jingles of Santa’s sleigh.
The company’s financial landscape is a clear meadow, unmarred by the thorns of debt. This fiscal harmony demonstrates stability in the unpredictable realm of Bitcoin mining. As 2024 beckons, Riot sketches a bold vision of amplifying its hash rate prowess to over 20 EH/s.
Delving deeper, Riot’s power strategy is like a masterstroke of genius, ensuring its place among the line of cost-efficient miners. To mine a single Bitcoin, Riot expends a mere $14,400, a stark contrast to its peers, such as Marathon, who expend nearly $24,000 for the same endeavor.
The financial canvas of Q3 2023 was also a vibrant mosaic of success for Riot. With a revenue of $51.9 million and EBITDA standing tall at $31.6 million, the company showcases a robust EBITDA margin of 61%. This figure is not just a number but a testament to Riot’s efficiency as a low-cost miner.
As Bitcoin’s trajectory aims skyward, Riot positions itself as a conduit for flourishing cash flows and positive returns.
3. Microsoft Corp (MSFT)
As 2023 nears its end, Microsoft emerges as a shining star in the technology arena, leading the markets with an impressive surge.
The fuel for this meteoric rise? A remarkable 24% year-over-year surge in Microsoft Cloud revenue, reaching a lofty $31.8 billion in the September quarter, surpassing expectations and outshining rivals like Google Cloud and Amazon Web Services.
Satya Nadella, Microsoft’s visionary Chief Executive, has been singing praises of the company’s artificial intelligence initiatives. At Ignite 2023, Microsoft flaunted its latest AI marvels, including the unveiling of the Azure Maia AI Accelerator. This home-grown AI chip, a strategic move to reduce reliance on Nvidia GPUs, is tailor-made for generative AI and other heavy-duty AI tasks. Early next year, this powerhouse is set to supercharge Microsoft’s data centers.
But there is more to Microsoft’s allure than just AI. The tech giant has its fingers in many pies, each with the potential to propel long-term growth and justify its premium stock valuation. Take, for instance, the impending closure of the Activision Blizzard deal. This acquisition is poised to be a game-changer for Microsoft’s Xbox, setting the stage for dominance in the gaming industry. Moreover, Microsoft’s adventurous dive into making custom chips adds another layer to its multifaceted growth narrative.
While gaming might be a long-term growth driver, Microsoft’s venture into custom chips is a more immediate catalyst, setting the stage for further innovation and market dominance.
In sum, as the year wanes, Microsoft stands out not just as a leader in AI and cloud computing, but as a multifaceted force, strategically positioned for sustained growth across various dynamic sectors.