During the holiday season, people start making lists of gifts they would like to receive. But for investors, the holiday season brings a different kind of listing. Investors can build their Christmas stock shopping list by selecting stocks with resilient growth, constructive price trends, and reasonable valuations. Options offer investors a good way to bet on these stocks while reducing risk. We will review these deals further down in the article. When it comes to choosing the right gift, a systematic, hands-on approach rarely resonates (if you doubt me, try buying someone a new mop for the holidays). This exercise screened mega-cap stocks based on only three high-level factors and then narrowed the list to a relatively small number of companies. I arbitrarily excluded several companies that met the filter, but were rejected as some kind of “forced challenge,” such as Southwest Airlines (LUV). Sorry, LUV. The filters I applied are: (1) Year-over-year sales increase of at least 6%. (2) Trading above the 50-day moving average. (3) PEG ratio less than 2; The largest companies tend to have revenue and profit growth that significantly outpaces economic growth. Therefore, large-cap indexes typically see revenue growth of 5-6% per year. When picking stocks for yourself, it’s best to exclude companies that aren’t growing at least as fast as the S&P 500’s overall earnings. Constructive price action is also beneficial, and stocks trading below their 50-day moving average are not showing momentum. Therefore, stocks that did not exceed their 50-day moving average were excluded. Finally, some evaluation metrics were applied to avoid overpayment. Valuation is a relative concept, so we’re willing to pay a higher P/E for a company that grows faster. We only included companies with forward PEG ratios less than 2. Here are the industry-specific results: Consumers and Digital Platforms: Structural Growth in Spending and Engagement Roku (ROKU), Alphabet (GOOGL), Amazon (AMZN) The digital advertising and streaming economy continues to expand throughout business cycles. Roku continues to be the core operating system for connected TV, gaining a growing share of ad spend even as linear decline accelerates. Alphabet maintains its leadership in search, cloud, and digital advertising, supported by consistent mid-single-digit to low-double-digit revenue growth at scale. Meanwhile, Amazon maintains its leadership across e-commerce, logistics, and cloud services, benefiting from accelerated AWS optimization and continued retail modernization. Travel, Leisure and Lifestyle: Reopening Tailwinds, Wealth Effects, and Changing Consumer Preferences Las Vegas Sands (LVS), Planet Fitness (PLNT), ON Holdings (ONON) Las Vegas Sands’ Macau-focused recovery continues as visitation trends normalize and premium mass gaming stabilizes, driving strong year-over-year revenue growth. Planet Fitness benefits from a resilient ‘value fitness’ model and consistent unit expansion, while ON Holding captures premium athletic demand with margin growth and global brand recognition. As a side note, ON sent me more shoe and apparel gifts under the tree last year than any other brand, including Vuori (one of my wife’s favorites), and even more than Lululemon, a perennial favorite before 2023. Financials: A capital-efficient mix at a rational valuation Citigroup (C), New Holdings (NU) Citigroup represents a contrarian value concept characterized by global restructuring, returns on capital, and improved cost discipline. and compressed valuation multiples. The fact that the stock is trading above a major moving average on a positive outlook for earnings growth suggests that institutional investors are starting to price in stabilization. Although it didn’t make it into the screening filter, I’ve also been critical of Wells Fargo (WFC) because its balance sheet is strong and its historic growth rate has been hampered by restrictions placed on the company by regulators as penalties for past misconduct (such as opening accounts without customers’ permission). These restrictions inhibited aggressive lending practices, so even if the crack in consumer credit turns out to be more severe than expected, the impact will likely be less. In contrast, Nu Holdings is a fast-growing fintech/digital financial services company. With over 100 million customers across Latin America, NU delivers explosive revenue growth with attractive unit economics. I don’t know much about this business, but I’m intrigued by its explosive growth rate and incredible profits. Popular expectations are for 2026 net margins to be around 21.5% Healthcare and Life Sciences: Innovation with Durable Economics Regeneron (REGN) , Globus Medical (GMED) , Eli Lilly (LLY) The healthcare sector continues to produce some of the most durable formulations on the market. While Regeneron remains a leader in immunology and ophthalmology, Globus Medical benefits from long-term growth in medical devices, robotics, and minimally invasive surgery. Eli Lilly maintains one of the world’s most powerful pipelines with drugs to treat obesity and diabetes that are reshaping the pharmaceutical economy. Industry and Infrastructure: Reshoring, Electrification, and Infrastructure Beneficiaries Cycle Comfort Systems (FIX), Quanta Services (PWR), Vertiv (VRT) Infrastructure spending has been one of the economy’s most persistent multi-year trends. Comfort Systems benefits from nonresidential HVAC demand, data center expansion, and industrial renovations. Quanta Services is a key beneficiary of grid modernization and electrification. Vertiv, on the other hand, is closely tied to the explosive growth of AI-driven data centers, offering thermal and power management solutions. Optical, semiconductor, and connectivity technologies: the backbone of the AI and computing cycle Lumentum (LITE) , Amphenol (APH) , Coherent (COHR) , Twilio (TWLO) , AMD (AMD) , Lam Research (LRCX) , Micron (MU) , NVIDIA (NVDA) , Western Digital (WDC) , SanDisk (SNDK) Few sectors exhibit long-term growth as strong as semiconductors, optics, and computing infrastructure. The screen featured a broad spectrum of Lumentum and Coherent, which support optical networking, lasers, and photonics, which are critical components of connectivity in the age of AI. Amphenol, a world-class connector manufacturer, is benefiting from the increase in electronic content across a variety of industries. A business model shift towards profitability and value-driven growth puts Twilio on screen. AMD, NVIDIA, Micron, Lam Research, and Western Digital represent the core of the AI, memory, and logic cycle. SanDisk is integrated with Western Digital, reflecting improving fundamentals in the storage market. Almost half of the select list is from the semiconductor and connectivity ecosystem, highlighting the strength of long-term technology demand. However, it must be noted that this is also a cyclical industry driven by chip prices. You can also take a small position in each of these to avoid overweighting in space if the pendulum swings in the opposite direction. Materials and Commodities: Strategic Exposure with a High-Quality Balance Sheet Newmont (NEM) Newmont provides exposure to the strategic asset class of gold while maintaining its production scale, operational diversity and disciplined cost structure. As most people have observed, gold prices have risen much faster than costs to miners in recent years. For example, it can be easily observed in the relationship between gold and oil. While many people spend December looking for gifts, disciplined investors can use this season to review their portfolios and identify new opportunities. Companies spanning technology, healthcare, financials, industrials, and commodities represent a select selection of large-cap stocks with a combination of growth potential, technological strength, and valuation discipline. If you’re creating a holiday wishlist to create a forward-looking, quantitatively grounded portfolio, this is an attractive starting point. In the coming weeks as the year draws to a close, we’ll focus on option strategies for one or perhaps some of the names on this list. From today until the end of the year, The Trade will feature options strategies for each (or perhaps more than one) of these. Today we begin with a challenging level called “Return to the Crime Scene” on Roku. The chart above combines the January ’85 short put with a 1×2 call spread of 105/120. If the stock price falls, the trader risks buying the stock for $85 less the $0.90 he collected to make the trade (just under 1% of the current stock price on a static basis). As the stock price rises, you participate up to the $120 short strike, but then your profits drop to an upward break-even point of just under $136. Every dollar beyond that is a loss. The important point is that traders are actually net shorting the stock (which is 20% higher than the current share price in just two months). Don’t want to risk a short position? Simply trade a 1-up call spread risk reversal. January I will only sell one of my 120 instead of two. Disclosure: None. All opinions expressed by CNBC Pro contributors are solely their own and do not reflect the opinions of CNBC, NBC UNIVERSAL, its parent or affiliate companies, and may have been previously disseminated on television, radio, the Internet, or another medium. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
