Wall Street ended November on a solid note maintaining an impressive rally since January 2023. On Nov. 29, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — gained 0.4%, 0.6% and 0.8%, respectively. Both the Dow and the S&P 500 recorded all-time highs on an intraday and closing basis.
For November, the Dow, the S&P 500 and the Nasdaq Composite — rallied 7.5%, 5% and 6%, respectively. Both the Dow and the S&P 500 posted November as their best month in 2024. Moreover, the small-cap benchmark — Russell 2000 — climbed 10.8% last month.
October’s solid performance, the Fed’s dovish stance and favorable economic data should drive the U.S. stock markets this month too. Under this circumstance, we recommend five momentum stocks for December. These are: Abercrombie & Fitch Co. ANF, Choice Hotels International Inc. CHH, Leonardo DRS Inc. DRS, Vistra Corp. VST and Nutanix Inc. NTNX.
Positives for December
The Fed reduced the benchmark lending rate by 75 basis points to 4.50-4.75% in two consecutive FOMC meetings in September and November. The CME FedWatch interest rate derivative tool currently shows a 66% probability that the central bank will cut the Fed fund rate by another 25 basis points in the December FOMC meeting.
Fundamentals of the U.S. economy remains rock solid. The U.S. GDP grew at 1.6%, 3% and 2.8%, respectively, in first three quarters of 2024. On Nov 27, the Atlanta Fed GDPNow projected the GDP growth rate of fourth-quarter at 2.7%. This indicates no signs of softness.
The Department of Commerce reported that the Personal Consumption Expenditure (PCE) price index for October increased 0.2% month over month and 2.3% year over year. Core PCE (excluding volatile food and energy items) price index — the Fed’s favorite inflation gauge — rose 0.3% on month over month and 2.8% on year over year. Both metrics were in line with consensus estimates.
5 Momentum Stocks to Buy for December
These five stocks have strong potential for December and have seen positive earnings estimate revisions in the last 30 days. Each of the stocks sports a Zacks Rank #1 (Strong Buy) at present and has a Zacks Momentum Score of 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 in the past month.
Image Source: Zacks Investment Research
Abercrombie & Fitch Co.
Abercrombie & Fitch operates as an omnichannel retailer in the United States, Europe, the Middle East, Asia, the Asia-Pacific, Canada, and internationally. ANF offers an assortment of apparel, personal care products, and accessories for men, women, and kids under the Abercrombie & Fitch, abercrombie kids, Hollister, and Gilly Hicks brands. ANF sells products through its stores, various wholesale. franchise, and licensing arrangements, as well as e-commerce platforms.
ANF posted strong third-quarter fiscal 2024 results, with sales and earnings surpassing the Zacks Consensus Estimate and showing year-over-year improvements. The strong performance was fueled by substantial growth across regions and brands, especially in the Americas and the Abercrombie brand. ANF’s earnings were supported by robust revenue growth, and enhanced gross and operating margins.
Abercrombie & Fitch has an expected revenue and earnings growth rate of 14.1% and 67%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 1.4% in the last seven days.
Choice Hotels International Inc.
Choice Hotels International reported mixed third-quarter 2024 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. However, both metrics increased on a year-over-year basis. The quarter’s performance was backed by the effective execution of its growth strategy.
CHH accelerated unit growth and expanded its global pipeline. CHH also increased its international presence and significantly grew the size of the company’s rewards program. CHH believes that it is well positioned to deliver bottom-line growth as well as maintain shareholder value on the back of the aforementioned business strategies supported by the improving demand backdrop.
Choice Hotels International has an expected revenue and earnings growth rate of 1.6% and 10.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% in the last seven days.
Leonardo DRS Inc.
Leonardo DRS provides defense electronic products and systems, and military support services for the U.S. military intelligence agencies and allies. DRS operates through Advanced Sensing and Computing segment, and Integrated Mission Systems segments. DRS’ broad technology portfolio focuses on advanced sensing, network computing, force protection and electric power and propulsion as well as a range of key defense priorities.
Leonardo DRS has an expected revenue and earnings growth rate of 13.2% and 26%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.2% in the last seven days.
Vistra Corp.
Vistra operates as an integrated retail electricity and power generation company. VST retails electricity and natural gas to residential, commercial, and industrial customers across 20 states in the United States and the District of Columbia. VST operates through six segments: Retail, Texas, East, West, Sunset, and Asset Closure.
VST announced that it would acquire its remaining 15% interest in Vistra Vision LLC. Utility operators are looking for new avenues to increase their clean electricity generation assets and lower emissions. Vistra’s decision to become the 100% owner of Vistra Vision with a portfolio of highly-valuable, carbon-free assets in the key growing markets across the United States, should be immensely fruitful for it going forward.
Vistra has an expected revenue and earnings growth rate of 33.6% and 38.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.9% in the last 30 days.
Nutanix Inc.
Nutanix’s fiscal first-quarter results benefited from growth in the company’s extending partnerships and clientele, as well as the solid adoption of its new capabilities and hybrid cloud solutions. NTNX continues to witness strong logo performance with 360 new logo additions, growing 50%-plus year over year.
The adoption rate of NTNX’s AHV hypervisor has been strong as customers continued to opt for it as a low-cost alternative to other vendor offerings. A healthy pipeline of big deals is a tailwind. NTNX’s transition to software-only sales will boost its margins over the long run.
Nutanix has an expected revenue and earnings growth rate of 14.4% and 9.9%, respectively, for the current year (ending July 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.7% in the last seven days.
Must-See: Solar Stocks Poised to Skyrocket
The solar industry stands to bounce back as tech companies and the economy transition away from fossil fuels to power the AI boom.
Trillions of dollars will be invested in clean energy over the coming years – and analysts predict solar will account for 80% of the renewable energy expansion. This creates an outsized opportunity to profit in the near-term and for years to come. But you have to pick the right stocks to get into.
Discover Zacks’ hottest solar stock recommendation FREE.Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
Choice Hotels International, Inc. (CHH) : Free Stock Analysis Report
Nutanix (NTNX) : Free Stock Analysis Report
Vistra Corp. (VST) : Free Stock Analysis Report
Leonardo DRS, Inc. (DRS) : Free Stock Analysis Report
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