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5 Rocket Stocks to Buy for a Santa Claus Rally

BALTIMORE ( Stockpickr) -- 'Twas the night before Christmas when all through Wall Street, not a creature was stirring, not even an equities research intern. As families all across the country settle in for the holidays, there's one thing that those people aren't doing: trading. That's why this week tends to be the quietest week for stocks all year.

>>5 "Magic Formula" Stocks for 2013

But quiet's not a bad thing...

Even though the week between Christmas and New Year's Day typically sports exceptionally low volume, it historically provides investors with a melt-up known as a "Santa Claus Rally." As investors count down the final days and hours of trading in 2012, that would be a welcome phenomenon -- especially as the headline risk of the fiscal cliff continues to put a knot in investors' stomachs.

Despite Friday's cliff-induced selloff, stocks actually managed to hold their ground pretty well last week, the S&P 500 climbing 1.17% in spite of the selling. So while stocks aren't exactly starting Christmas Eve with the most inspiring trajectory, it's a little early to count out a Santa Claus rally.

And even though the market will be operating on a shortened schedule this week (closing at 1pm today and closed all day on Christmas), we're positioning ourselves to take advantage. That's why we're turning to a new set of Rocket Stock names this week.

For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 181 weeks, our weekly list of five plays has outperformed the S&P 500 by 74.7%.

>>Outwit the S&P in 2013 With 5 Hated Stocks

Without further ado, here's a look at this week's Rocket Stocks.

Northrop Grumman

First up is Northrop Grumman (NOC - Get Report), one of the country's biggest defense contractors. Northrop has been facing the same challenges as its peers, with the black clouds of shrinking defense spending hanging over its head. So, like others, they've been pushing outward, and courting other revenue sources outside of DoD.
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CAH $77.10 -1.40%
CSCO $24.68 9.64%
KORS $49.13 -2.10%
NOC $183.86 -2.40%
SD $0.15 -11.76%


Chart of I:DJI
DOW 15,660.18 -254.56 -1.60%
S&P 500 1,829.08 -22.78 -1.23%
NASDAQ 4,266.8370 -16.7550 -0.39%

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