At the end of every year, children race downstairs to check under the tree to see if Santa Claus brought them the toys they asked for. Similarly, each December investors check the market to see whether the Santa Claus rally brought them the gains they’ve been waiting for. The uptick in the market during the days between Christmas and New Year’s Day is on its way, so now is a good time to suss out which stocks to buy to capitalize on the coming rally.
This year, choosing stocks to buy is even more difficult than it has been in the past, as the Trump rally has given traders reason to question whether a Santa Claus rally will be possible. However, analysts believe that stocks will continue on their upward trajectory through the holidays, so investors shouldn’t discount the Claus rally.
Here’s a look at three stocks to buy in order to prepare your portfolio for a healthy dose of Christmas spirit.
Stocks to Buy: UnitedHealth Group Inc (UNH)
UnitedHealth Group Inc (NYSE:UNH) shareholders have enjoyed a profitable year, with shares rising 38% over the course of the last 12 months. The insurer’s rise isn’t over yet though — the firm has forecast a strong finish to 2016 and an even better 2017.
As the nation’s largest health insurer, UNH also stands to benefit a great deal from President-elect Trump’s policies. Trump’s promises to do away with Obamacare would be beneficial for UNH since the firm has said that participating in the program has been a major headwind for its business. Not only that, but Trump may make it possible for insurers to do business across state lines, which would represent a massive opportunity for UNH.
If all goes according to plan, the company stands to make a pretty penny in 2017 and investors can expect some of those dollars to be returned to shareholders. The dividend yield for UNH stock is 1.6%, and although that’s not a head-turning figure, it’s likely to increase, making UNH a stock to buy before the Santa Claus rally, but hold on to through the new year.
Stocks to Buy: Ventas, Inc. (VTR)
Ventas, Inc. (NYSE:VTR) is a healthcare real estate investment trust that has been expanding quickly over the past few years. VTR makes for a good buy ahead of the Santa Claus rally, because the stock is likely to rise between Christmas and New Years based on its previous performance during that period: 100% of the time, VTR has made gains during the Santa Claus rally. Therefore, investors can be relatively confident that their shares will rise in the coming days.
Even without a lift from St. Nick, Ventas is one of the stocks to buy and hold on to. The company invests in senior housing- particularly in high-income markets. When it comes to healthcare real estate, Ventas is a pretty good bet as the company has seen its profits rise steadily over the past few years.
Ventas is also a good choice for long-term investors because the sector is a relatively safe one and it will probably see a fair amount of consolidation in the future. The number of senior citizens is rising rapidly in the U.S., so the need for senior housing is also likely to rise steadily in the coming decade, that means healthcare REITS are likely to make money despite economic conditions as the elderly population increases.
The sector is also fragmented with no single REIT emerging as a major player, so consolidation is inevitable as the sector grows. Ventas is well positioned in that respect because the company is one of the largest healthcare REITs out there.
Stocks to Buy: Apple Inc. (AAPL)
This year has been a turbulent one for Apple Inc. (NASDAQ:AAPL) shareholders, but brighter horizons are coming for the tech giant as the firm prepares to roll out new phones in 2018.
The buzz around the newest iPhone model suggests that the company will include things like an OLED screen and wireless charging. Not only is demand for the new phones likely to increase, but comps in the coming year will be much easier than they have been in the past few quarters.
While it would have been more fortuitous to have purchased AAPL stock earlier this year when it was trading under $100, $110 per share isn’t a bad deal for such a solid company. Apple has one of the strongest balance sheets on Wall Street and the company may become even more flush with cash once Trump takes office. The President-elect has promised to reform corporate tax laws to make it easier for U.S. companies to repatriate funds overseas.
This is huge news for Apple, which holds some $200 billion abroad. This is also huge news for shareholders, who are likely to see some of that cash returned to them in one way or another.
As of this writing, Laura Hoy was long AAPL and VTR.