ZACKS·2026-01-05 18:00Core Viewpoint - The stock market presents compelling opportunities as the US economy shows resilience, the AI boom continues, and equity rallies broaden beyond a few leading stocks, creating favorable conditions for stock selection heading into 2026 [1] Group 1: Zacks Rank and Stock Selection - The Zacks Rank is highlighted as an effective investment tool with a strong track record of identifying emerging leaders before they gain widespread recognition [2] - Three stocks are identified as top picks: Pagaya Technologies Ltd. (PGY), Eli Lilly (LLY), and Weatherford International (WFRD), all carrying a top Zacks Rank and backed by strong growth expectations and attractive valuations [3] Group 2: Eli Lilly (LLY) - Eli Lilly has shown exceptional performance due to the adoption of GLP-1 weight-loss therapies, experiencing a powerful stock advance towards the end of 2025 after a temporary pause [5][6] - The stock is currently rated Zacks Rank 1 (Strong Buy) with earnings estimates revised upward, trading at 32.2x forward earnings, and projected EPS growth of 41.4% annually over the next three to five years [6] - Technical analysis indicates a bullish setup, with a recent breakout above resistance levels suggesting potential for further gains [7] Group 3: Pagaya Technologies Ltd. (PGY) - Pagaya Technologies is positioned in the "buy now, pay later" (BNPL) space, previously highlighted for its strong growth projections and attractive valuation, with shares having more than tripled before a significant pullback [9][10] - The stock has returned to a Zacks Rank 1 (Strong Buy), trading at 6.5x forward earnings, with sales expected to grow by 28.4% this year and 19.2% next year, alongside a projected earnings growth of 274% [10] - Recent technical movements indicate a potential pivot point for renewed buying interest, suggesting favorable conditions for investors [11] Group 4: Weatherford International (WFRD) - Weatherford International's shares have risen sharply amid geopolitical developments affecting global energy markets, particularly following military actions in Venezuela [13] - The stock has maintained a top Zacks Rank and has shown signs of renewed leadership in the energy sector prior to recent events [14] - Technical analysis shows a decisive breakout from a bull flag pattern, reinforcing a bullish outlook for Weatherford and the broader energy sector [15] Group 5: Investment Considerations - Each of the highlighted stocks offers unique investment opportunities: Eli Lilly as a structural growth leader, Pagaya as a high-upside growth story, and Weatherford as a play on a resurgent energy cycle [16]