5 Hidden Gems to Ride the Santa Rally

Market Overview - The U.S. stock market experienced its worst week since mid-November, with the Dow Jones falling 2.3%, the S&P 500 declining 2%, and the Nasdaq Composite Index dropping 1.8% [1] - Investors are anticipating a Santa Claus rally, which typically occurs in the final week of the calendar year and extends into the first two days of the New Year [2] Economic Indicators - The U.S. economy is expanding, driven by rising consumer confidence and increased spending power, with economic output reaching its highest level in nearly three years in December [3] - The S&P Global's flash U.S. composite PMI rose to 56.6 in December, up from 54.9 in August, indicating growth in both services and manufacturing sectors [3] - Retail sales in November rose faster than expected, reflecting strong consumer spending and economic momentum [12] - The University of Michigan's consumer sentiment index increased to 74 in December from 71.8 the previous month, marking the fifth consecutive month of improvement [12] Federal Reserve Actions - The Federal Reserve has cut interest rates for the third time in three months, bringing the benchmark rate to 4.25-4.50%, which is expected to lower borrowing costs and support business expansion [4] - The Fed's outlook has shifted, now projecting only two rate cuts in 2025 compared to four previously anticipated, due to a solid labor market and persistent inflation [9] Company Highlights - Upstart, an AI lending platform, saw its stock tumble 19% last week but has an estimated earnings growth rate of 204% for 2025 [5] - Industrial Logistics Properties has a Zacks Rank of 2 and a Momentum Score of A, despite a 13% decline in stock price last week and an estimated earnings growth rate of 25% for 2025 [6][13] - Cintas Corporation provides specialized services across North America, including corporate identity uniform programs and restroom supplies [7] - monday.com has an estimated earnings growth rate of 11.2% for this year, holds a Zacks Rank of 1, and has a Momentum Score of A [8] - Sezzle, a digital payments company, has an estimated earnings growth rate of 27.97% for the next year and also holds a Zacks Rank of 1 with a Momentum Score of A [14][17] Investment Opportunities - A selection of stocks, referred to as "Secret Santas," includes Upstart Holdings Inc., Industrial Logistics Properties Trust, Sezzle Inc., Cintas Corporation, and monday.com, all of which have underperformed recently but show strong growth potential for 2025 [10]