Image Source: Pexels
 

Historically, in the brief window between late December and early January, the stock market often sees what’s known as the Santa Claus rally. Since 1926, this seasonal pattern has delivered an average gain of about 1.6% for the S&P 500, an anomaly too consistent to dismiss.

The Santa Claus rally makes sense considering this window combines year-end optimism and portfolio rebalancing ahead of the new year, including tax-loss harvesting and other institutional positioning.

But in this year’s context of the post-tariff macro environment, which stocks should investors consider, assuming they are already discounted to begin with?
 

Pfizer Inc. (NYSE: PFE)

Over the last five years, few large companies have experienced such significant stock deflation as the pharmaceutical giant Pfizer, which has dropped by 53% from its all-time peak of $49.87 in mid-December 2021. The company was one of the beneficiaries of the pandemic narrative, having rolled out novel mRNA injections, which turned out to be highly controversial.

Consequently, Pfizer stock suffered pressure due to concerns that it would face punitive fallout. With President Trump’s second term, however, that noise has not merely taken a back seat – it’s been dumped on the curb altogether.

Discerning readers may have already anticipated this likely scenario between Israeli-aligned President Trump and his health secretary pick, Robert F. Kennedy Jr. In other words, investors can disregard the noise and re-focus on Pfizer’s fundamentals.

After meeting with President Trump in late September, Pfizer CEO Albert Bourla announced an unprecedented capital expansion of $70 billion for research and development of new drugs, in addition to receiving a three-year grace period on tariffs. Last Thursday, Trump announced that both Eli Lilly and Novo Nordisk will slash the prices of their respective obesity drugs, allowing Medicare and Medicaid to cover the costs.

Although Pfizer doesn’t have a deployed weight-loss drug to participate in this highly profitable and expanding market, the company is moving in that direction. Namely, obesity drug company Metsera announced last Friday that it will be acquired by Pfizer in a $10 billion deal, at $86.25 per MTSR share.

Altogether, Pfizer is poised for a strategic resurgence. With a price-to-earnings (P/E) ratio nearly three times lower than Eli Lilly’s, and a relatively high dividend yield of 7.05%, exposure to PFE stock is now optimal. According to the Wall Street Journal’s consensus, the current PFE price of $25.51 is aligned with the bottom outlook of $24, while the average PFE price target is $28.61 per share.
 

Newmont Corp. (NYSE: NEM)

In early July, we favorably covered this Colorado-based gold mining company when it was only trading at $58.53 per share. After flatlining over the past month, NEM stock remains significantly above that price level at $88.52 per share. Yet, Wall Street Consensus suggests that even this level is just below the bottom price target forecast of $89.95, while the average NEM price target is $104.69 per share.

NEM’s price correction in late October stemmed from the precious metal’s volatility, as we covered previously just before Newmont’s Q3 earnings call. Nonetheless, in the same coverage, we also noted that investors should keep NEM on their radar for future pullbacks.

After all, with a relatively low price-to-earnings ratio of 13.74, and governments’ unending hunger to monetize debt with fiat currencies, gold’s demand is likely to remain strong.
 

Utz Brands Inc. (NYSE: UTZ)

Supplying comforting snacks to markets since 1921, Utz Brands has an exceptionally high price-to-earnings ratio of 161. In the latest Q3 earnings report ending September 28, the company posted organic net sales growth of 3.4%, to $377.8 million.

Although Utz Brands reported a net loss of $20.2 million in this quarter, the company increased its cash reserves by $1.6 million from the year-ago quarter. This is part of the deleveraging process following years of major capital expenditures, with expansion goals set for the salty snack market in California, the largest in the U.S.

To that end, Utz Brands acquired Insignia International’s direct store delivery (DSD) for distribution purposes. With productivity improvements, the company significantly increased its adjusted gross profit margin year-over-year, from 39% to 41.1%.

With such strong positioning for growth, Utz Brands’s high P/E is not surprising. More importantly, just like with the two prior stock candidates, exposure to UTZ appears to be optimal right now. According to the Wall Street Journal Consensus, the bottom outlook of $11.50 is above the current price range of $10.32, while the average UTZ price target is $15.75 per share.

More By This Author: