In the current year, the markets have shown that multi-fold returns can come in a matter of weeks. In particular, it’s been a year to remember for the action in penny stocks. With a few weeks still before holiday season, there are Christmas stocks to buy that can deliver quick returns.
A risky way to trade is by using leverage or going overweight on speculative stocks.
However, there is a safer way to look for quick gains — trade in fundamentally strong stocks without the use of leverage. If these stocks trend higher in the near-term, quick profits can be booked. In the worst-case scenario, investors will need to hold the stocks longer than planned.
My focus is on Christmas stocks to buy that look poised for a breakout in the next few weeks. I believe that these stocks can add to the wallet for Christmas and new year spending. At the same time, these Christmas stocks to buy are worth holding well into 2022.
Let’s discuss the reasons to be bullish.
- XPeng (NYSE:XPEV)
- Marathon Digital (NASDAQ:MARA)
- Target Corporation (NYSE:TGT)
- Carnival Corporation (NYSE:CCL)
- Apple (NASDAQ:AAPL)
- Intel (NASDAQ:INTC)
- Bumble (NASDAQ:BMBL)
7 Christmas Stocks: XPeng (XPEV)
XPEV stock has witnessed some rally in the recent past. However, on a year-to-date 2021 basis, the stock is largely sideways. Recently, Morgan Stanley (NYSE:MS) opined that XPEV stock is “very likely” to rise over the next 15 days.
For November 2021, XPeng reported delivery of 15,613 vehicles. On a year-on-year basis, deliveries were higher by 187%. The company is therefore on a high-growth trajectory, which is likely to sustain in 2022.
XPeng will also be launching the G9 model in the third-quarter in 2022. The key point here is that the SUV is aimed at international markets. XPeng is likely to enter more European countries in 2022, which will help in boosting vehicle deliveries.
Another reason to be bullish on XPeng is sustained expansion in vehicle margin. For Q3 2020, the company’s vehicle margin was 3.2%. Margin expanded to 13.6% for Q3 2021. With strong deliveries growth, margin expansion is likely to sustain.
Overall, XPeng is high on innovation and among the electric vehicle companies that is positioned to survive and grow. At current levels of $46.45, the stock looks attractive for the near-term and long-term.
Marathon Digital (MARA)
In November 2021, MARA stock touched highs of $83. With a sharp correction in Bitcoin (CCC:BTC-USD), the stock has declined sharply to $42. It seems that the correction is overdone and MARA stock is poised for a sharp reversal rally.
Marathon Digital is likely to have a big 2022. To put things into perspective, Marathon reported mining capacity of 2.7EH/s as of Q3 2021. By mid-2022, the company expects mining capacity to increase to 13.3EH/s.
The company expects that this will translate into revenue of $92.4 million per month. This would imply an annualized revenue potential in excess of $1 billion. Clearly, the best part of growth is still to come for Marathon Digital.
Another point to note is that the company is exclusively into Bitcoin mining. However, as capacity ramps-up, Marathon will have robust financial flexibility. This will provide scope for organic and acquisition driven growth. It’s very likely that Marathon will be more diversified in the coming years.
In the near-term, Bitcoin is likely to bounce-back after a sharp correction. Inflation remains a concern and Bitcoin is considered as one of the inflation hedges. With limited supply and wider adoption, rising Bitcoin price will benefit Marathon Digital.
7 Christmas Stocks: Target Corporation (TGT)
The consumption sector is one of the key growth drivers for the U.S. economy. A key part of consumption sector is retail spending. TGT stock is therefore among the top Christmas stocks to buy.
The National Retail Federation data indicates that 180 million Americans shopped from Thanksgiving Day through Cyber Monday. Even with the omicron scare, it’s likely that retail spending will remain robust.
TGT stock touched highs of $269 in November 2021. Currently, the stock trades at $238. I would not be surprised if the stock rally by 10% to 15% in the coming weeks.
It’s worth noting that Target Corporation has built a strong omni-channel sales network. Therefore, even if physical store sales decline in a relative basis due to the virus scare, online sales will remain robust.
I also like TGT stock from a valuation perspective. Currently, the stock trades at a forward price-to-earnings-ratio of 18.8. This is attractive for a stock that offers a dividend yield of 1.47%. Additionally, comparable store sales growth has been healthy in the last few quarters.
From a medium to long-term perspective, Target will be investing $4 billion annually over the next few years. This will help in boosting capabilities across the company’s retail platform. It’s therefore likely that comparable store sales growth remains attractive.
Carnival Corporation (CCL)
CCL stock slumped in the recent past on omicron fears. However, the selling seems to be overdone and a reversal rally is on the cards.
A key reason is that initial reports suggest that the coronavirus variants might be causing milder symptoms than before. This has translated into a renewed rally for travel and tourism stocks. This rally can potentially sustain well into the holiday season.
It’s worth noting that the company pointed out in Q3 2021 results that booking for second half of 2022 are better than 2019 levels. Therefore, if the omicron fears subside further, the company is positioned for a strong year ahead.
Another important point to note is that voyages for Q3 2021 were cash flow positive. This trend is likely to sustain in the coming quarters. A key concern for Carnival Corporation is leverage. However, as cruise capacity increases and cash flow swells, the company will be positioned to de-leverage.
Overall, there is a significant amount of pent-up travel demand. CCL stock is therefore attractive not just for the near-term, but also for the next few quarters.
7 Christmas Stocks: Apple (AAPL)
In another bullish call, Morgan Stanley boosted the share price target for AAPL stock to $200. The stock has already been in an uptrend, which is likely to sustain.
One reason for the bullish momentum is anticipated events for the coming year. As Morgan Stanley points out, Apple is working on augmented reality, virtual reality and autonomous vehicles. Potential announcements on these will serve as price upside catalyst.
Additionally, Apple is on a high-growth trajectory and the company is looking more diversified. In the recent past, the services and wearable segments have delivered healthy growth. At the same time, the 5G phone is likely to be a growth driver in 2022.
From a medium to long-term perspective, AAPL stock is also worth holding for dividend investors. Considering growth in operating cash flows, dividend growth is likely to sustain.
For the last financial year, Apple reported operating cash flow of $104 billion. Healthy cash flows also provide the company with financial flexibility for opportunistic acquisitions to boost the innovation pipeline. Overall, AAPL stock is positioned for further rally and is among the top Christmas stocks to buy.
INTC stock is probably among the most undervalued names in technology stocks. At a forward P/E of 14.29, the stock is a value buy.
However, that’s not the only reason to consider the stock among the top stocks to buy before Christmas. Recently, it was reported that Intel is planning to list its Mobileye self-driving unit.
It’s believed that the unit is likely to have a valuation of more than $50 billion. With this news, INTC stock has witnessed a break-out, which might sustain in the coming weeks.
It’s also worth noting that in September 2021, Intel initiated construction of two new factories in Arizona. Intel is expecting to invest $20 billion in these two factories amidst chip shortage globally.
Further, for 2022, Intel expects to invest $25 billion to $28 billion. With strong cash flows, the company is positioned for organic growth through innovation in products. The company already has a pipeline of innovation that includes “Next-gen discrete GPU for gaming” and ASIC-based IPU, among others.
The key point here is that the worst might be over for INTC stock. With the potential listing and growth plans, it’s very likely that the stock will be in an uptrend in 2022.
7 Christmas Stocks: Bumble (BMBL)
An important point to note is that BMBL stock has been in a downtrend since the initial public offering. The stock is still meaningfully lower as compared to all-time highs of $85. The recent upgrade is likely to ensure a near-term rally.
As of Q3 2021, Bumble reported total paying users of 2.9 million. For the same period, the average revenue per paying user was $22.97. While the EBITDA margin declined, it was due to investment in product development and marketing. As the ARPU continues to improve, Bumble is positioned to deliver healthy margins in the long-term.
Another point to note is that Bumble is gradually expanding into Latin America, Southeast Asia and India. There is a big addressable market in these regions. This will ensure sustained growth in active users.
Overall, BMBL stock looks attractive for some quick gains from current levels. If the initial outlook for 2022 is bright, the rally can be extended.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.