End of Year Rally: 3 Stocks to Watch (IDCC, FUTU, EXEL)

As the calendar winds down, the stock market often heats up. The last five weeks of the year have historically shown a bullish seasonal pattern, fueled by holiday optimism, institutional portfolio adjustments, and a tendency for investors to position themselves for the upcoming year. This “Santa Claus rally” can provide lucrative opportunities for investors who know where to look.

Combining this favorable market seasonality with the Zacks Rank—a proven stock-picking strategy rooted in earnings estimate revisions—can further enhance your chances of uncovering big winners. By focusing on top-ranked stocks with fair valuations and strong growth you can align with this seasonal trend to maximize returns.

Today, we’ll highlight three such stocks—InterDigital (IDCC), Futu Holdings (FUTU), and Exelixis (EXEL), which all boast Top Zacks Ranks and discounted valuations based on growth forecasts.


Image Source: EquityClock

InterDigital: Shares Rally on Huge Earnings Upgrades

InterDigital is a leader in mobile and video technology innovation, providing critical wireless and visual solutions to support global connectivity. The stock has soared over 80% year-to-date, showcasing strong investor interest and powerful momentum. Despite this impressive rally, IDCC remains attractively valued.

The company trades at a forward earnings multiple of just 12.7x, making it a bargain compared to its robust growth forecasts. Analysts project annualized EPS growth of 17.4% over the next three to five years, resulting in a PEG ratio of just 0.7—indicating significant value relative to its growth potential.

Adding to the bullish case, IDCC has experienced massive upward revisions in earnings estimates across all time frames. As shown in the table, consensus estimates for the current quarter have jumped by 262% in the past 60 days, while full-year forecasts are up over 46%. This level of earnings momentum gives InterDigital the coveted Zacks Rank #1 (Strong Buy) rating.

With strong fundamentals, bullish revisions, and a favorable valuation, InterDigital is a standout candidate in this year-end rally.

Zacks Investment Research
Image Source: Zacks Investment Research

Exelixis: Strong Profit Growth Carries Stock Higher

Exelixis is a biotechnology company focused on developing and commercializing cancer therapies. Its flagship product, Cabometyx, has driven significant revenue growth, making Exelixis a standout in the biotech space. This growth, coupled with a robust pipeline of therapies in development, has drawn investor attention, pushing the stock up more than 50% year-to-date.

Despite its impressive performance, Exelixis remains attractively valued. The stock trades at a forward earnings multiple of just 18.8x, which is low for a biotech company with an annualized EPS growth forecast of 23.5% over the next three to five years. Its PEG ratio is 0.8, which is a discount based on the metric.

Analysts have been raising their earnings estimates for Exelixis significantly. Over the past 60 days, consensus estimates for the current quarter, next quarter, and full-year have all seen upward revisions. More specifically, full-year EPS estimates have increased by 5.5%, while next year’s estimates are up 8.1%. These revisions higher give Exelixis a Zacks Rank #2 (Buy) rating, increasing the odds of a near-term rally.

Zacks Investment Research
Image Source: Zacks Investment Research

Futu Holdings: Stock Boast Compelling Technical Setup

Futu Holdings (FUTU) is a leading digital brokerage platform serving clients in Hong Kong and mainland China. The company offers an array of financial services, including trading, wealth management, and market data, through its sleek, tech-driven app. Futu Holdings also enjoys a Zacks Rank #1 (Strong Buy) rating, reflecting upward trending earnings revisions.

Additionally, from a valuation perspective, Futu is highly attractive. The stock trades at a forward earnings multiple of just 17.5x, paired with robust EPS growth projections of 20.4% annually over the next three to five years. Its PEG ratio of 0.86 underscores its compelling value relative to its growth trajectory, signaling potential for significant upside.

Beyond fundamentals, Futu’s technical chart presents an exciting setup. The stock is forming a descending wedge pattern—a bullish continuation signal—suggesting a breakout could be imminent. With Futu hovering near the wedge’s apex, a breakout above resistance could attract momentum traders and drive the stock higher into the end of the year.

TradingView
Image Source: TradingView

Should Investors Buy Shares in FUTU, EXEL and IDCC?

With the year-end rally potentially underway, stocks like Futu Holdings, Exelixis, and InterDigital present a compelling mix of strong growth, attractive valuations, and bullish setups. Each boasts upward-trending earnings revisions, solid fundamentals, and technical or momentum signals that align well with seasonal market trends.

While no investment is without risk, these stocks’ favorable growth profiles, combined with their Zacks Rank advantages, make them prime candidates to benefit from the “Santa Claus rally.” For investors looking to capitalize on this seasonal strength, FUTU, EXEL, and IDCC are worth considering.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 5 Stocks Set to Double. Click to get this free report

Exelixis, Inc. (EXEL) : Free Stock Analysis Report

InterDigital, Inc. (IDCC) : Free Stock Analysis Report

Futu Holdings Limited Sponsored ADR (FUTU) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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