3 Fantastic Stocks That Could Enjoy a Santa Claus Rally

By Investor Empires On Dec 22, 2024

Santa Claus will soon be on his way to deliver gifts to children around the world. But can the cheerful gift giver have something to offer investors, too? So called “Santa Claus Parades” It could happen towards the end of the year.

Three Motley Fool contributors think they’ve identified great stocks that could be well-positioned to benefit from a Santa Claus rally. Here’s why they chose AbbVie (NYSE: ABF), Novo Nordisk (NYSE: NFU)and Vertex Pharmaceuticals (NASDAQ:VRTX).

David Jagielski (AbbVie): As we approach the end of the year, one growth stock that may be due for a rally is AbbVie. The pharmaceutical company has a lot of long-term potential and may be one of the best stocks you can buy as the year comes to a close. The stock has had a tepid year with its shares up just 11% (as of Monday’s close), which pales in comparison. Standard & Poor’s 500That’s an impressive 27% rise so far.

Investors were bearish on the stock after the company announced that its schizophrenia drug, emraclidine, failed to meet its primary endpoint in phase 2 trials, prompting a stock selloff in November.

But this could create a great opportunity to buy the stock at a discount right now, especially after it reported some encouraging news from a different trial. Earlier this month, the company announced positive results for tavapadone, which met both primary and secondary endpoints in a phase 3 trial for the treatment of early Parkinson’s disease. The company is scheduled to file a new drug application next year, which could lead to another approval related to the disease. In October, regulators granted approval for Vialive, a treatment for advanced Parkinson’s disease.

Not every drug in AbbVie’s pipeline will be a success. But this is still a solid growth stock and investors appear overly optimistic about the outcome of the disappointing trial of emraclidine. With over 90 compounds in the pipeline, there will be good and bad along the way.

There is good value here for investors who are willing to be patient. Trading at just 15 times next year’s estimated future earnings (based on analyst estimates), it may only be a matter of time before AbbVie stock starts making a comeback.

Prosper Junior Bikini (Novo Nordisk): Various factors can cause the stock market to rise at the end of the year, including optimism about the year ahead. It’s hard to predict which companies – if any – will benefit through 2025, but Novo Nordisk is a good choice for several reasons. Let’s think about two. First, despite performing well in the first half of the year, the drugmaker has been struggling since then. In the past six months, Novo Nordisk shares have fallen 24%.

This is despite the company announcing strong growth in revenues and profits thanks to diabetes and obesity drugs. The market is arguably undervaluing Novo Nordisk. Second, the company could make significant clinical progress in the next year. Novo Nordisk has several programs in late-stage development. Maybe you will Release data to CagriSemaan experimental weight-loss drug that could generate $20 billion by 2030, according to some estimates.

Novo Nordisk can also publish results of semaglutide, the active ingredient in Wegovy and Ozempic, in the treatment of patients with Alzheimer’s disease and metabolic dysregulation-associated steatohepatitis, two areas with high unmet need. Novo Nordisk’s relatively weak performance since June and the potential catalysts it could face in 2025 could send Santa Claus stock higher. However, even if that doesn’t happen, the drugmaker remains one of the top picks in the industry. Novo Nordisk is an innovative company that consistently delivers strong financial results and has a deep and exciting pipeline.

Whether it collects Santa Claus or not, the company is worth investing in for the long term.

Keith Speights (Vertex Pharmaceuticals): Shares of Vertex Pharmaceuticals fell Thursday after the company announced results of a phase 2 clinical study evaluating susetrigine in the treatment of painful lumbosacral radiculopathy (LSR), a type of sciatica. However, I think a recovery at the end of the year is possible.

For one thing, the sell-off was overdone in my view. Investors were concerned that susetrigine did not perform statistically better than placebo in the phase 2 study. Importantly, the non-opioid pain drug still met the study’s primary endpoint of pain reduction on the Numerical Pain Rating Scale (NPRS). Vertex plans to talk to regulators about developing susetrigine into late-stage testing for an LSR.

It is not unusual for placebo response to be unexpectedly high in clinical trials of pain medications. Subsequent Vertex analyzes indicated that a different trial design could better control for this issue in phase 3 testing.

The bigger story for Vertex is that it is awaiting not one, but two FDA approval decisions over the next few weeks. The FDA is scheduled to announce its decision on approval of the triple-drug combination of vanzacaftor in the treatment of cystic fibrosis by January 2, 2025. The agency has set a PDUFA date of January 30, 2025 for its decision on susetrigine in the treatment of acute pain. . (By the way, the drug’s late-phase results in this indication look great with no yellow flags.)

I expect a thumbs up from the FDA for both drugs. I also expect the combination of vanzacaftor and susotrigine to be huge commercial successes for Vertex. Santa could easily bring a rally to this biotech stock.

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David Jagielski He has no position in any of the stocks mentioned. Keith Speights He has positions at AbbVie and Vertex Pharmaceuticals. Prosper Junior Bikini He has positions at Vertex Pharmaceuticals. The Motley Fool has positions in and recommends AbbVie and Vertex Pharmaceuticals. The Motley Fool recommends Novo Nordisk. The Motley Fool has Disclosure policy.

3 Great Stocks That Could Enjoy a Santa Claus Rally Originally published by The Motley Fool