High-Conviction Holiday Retail and E-Commerce Stocks to Target Before the Santa Rally Peaks

The "," a well-documented market phenomenon, has historically driven stock market gains during the last five trading days of December and the first two of January. Since 1950, , with . long-term trends suggest investors should remain cautiously optimistic. For 2025, the convergence of resilient consumer spending, early holiday retail performance, and macroeconomic tailwinds positions certain sectors and stocks as compelling opportunities ahead of the Santa rally's peak.

Sectoral Winners: Retail, , and Logistics

The U.S. holiday season in 2025 has already delivered record-breaking online sales, with during the Thanksgiving weekend. , . This shift is amplified by Gen Z's bifurcated spending habits: prioritizing essentials while maintaining discretionary spending on fashion and dining. Retailers like Dollar Tree, American Eagle Outfitters, and Macy's have already raised earnings forecasts for Q4 2025, reflecting strong demand.

Logistics and shipping companies, though not explicitly analyzed in historical data, are poised to benefit from the surge in e-commerce activity. The rise of -where consumers discover products while engaging in other online activities-has increased the frequency of purchases, further straining supply chains.

High-Conviction Stock Picks

1. Amazon (AMZN)

Amazon remains a cornerstone of the e-commerce Santa rally. In Q3 2025, , driven by robust holiday preparations. While , Amazon's diversified business model-encompassing retail and AWS-provides resilience. , outperforming peers like Carvana and BigCommerce, which saw significant losses.

2. Walmart (WMT)

Walmart's dominance in value-driven retail has been reinforced by shifting consumer behavior. In 2024, in holiday spending, . The company's stable balance sheet and focus on omnichannel integration-such as in-store pickup and returns-position it to capitalize on Gen Z's preference for hybrid shopping experiences.

3. Costco (COST)

Costco's 2024 performance underscores its appeal during economic uncertainty. , . Its membership model and bulk-discount strategy align with bargain-hunting consumers, particularly middle- and lower-income shoppers prioritizing essentials. With , Costco's value proposition remains intact.

4. United Parcel Service (UPS)

As e-commerce demand surges, UPS is a critical beneficiary of the logistics boom. While specific historical data for UPS during the Santa rally period is limited, its role in facilitating holiday deliveries. The company's 2024 earnings growth .

Driving Performance

Consumer spending patterns in 2025 reveal a nuanced landscape. Despite , sentiment remains mixed. High-income households and Gen Z continue to splurge on discretionary items, while middle- and lower-income shoppers trade down. This bifurcation favors retailers with broad product tiers, such as Walmart and Amazon, which cater to both segments.

The shift toward digital purchasing- holiday deals in 2024-also underscores the importance of tech-driven retail strategies. Companies that invest in AI-driven inventory management and seamless omnichannel experiences are likely to outperform.

Conclusion: Positioning for the Santa Rally

While the 2024 anomaly serves as a cautionary tale, the historical Santa rally's 79% success rate and 2025's early retail performance suggest a strong case for strategic positioning. Amazon, Walmart, Costco, and UPS emerge as high-conviction picks, supported by robust consumer spending trends, diversified business models, and sector-specific tailwinds. Investors should monitor macroeconomic signals, such as Federal Reserve policy and inflation trends, but the holiday season's structural dynamics remain a compelling catalyst for growth.