5 Rocket Stocks to Buy for a Santa Claus Rally

Michael Kors Holdings

Michael Kors Holdings (KORS) is having a stellar run in 2012: since the first trading day in January, shares of the apparel stock have doubled. Michael Kors has established an attractive niche in the luxury apparel and accessories business, making everything from clothes and handbags to watches and jewelry. And like other leaders in the space, the firm's namesake retail stores are a major growth driver right now...

That growth has been stair-step on KORS' income statement, with revenues climbing from just $377 million in fiscal 2008 to more than $1.2 billion last year. Distribution in major department stores gives Michael Kors considerable volume, but the firm's own retail stores offer a lot more: they're a major contributor to the enormous net margins that this firm books, and they give KORS ultimate pricing power at the cost of increased fixed expenses. Because the firm has been selective about where it builds (opting for high dollar volume malls), it should be able to withstand any unforeseen economic hiccups.

Since going public a year ago, Michael Kors has been one of the best post-IPO performers of its class. And an uptick in consumer spending makes it look like that trend will continue into 2013. A pristine balance sheet with ample cash and a tiny debt position helps round out the picture for this Rocket Stock...

Cisco

As the standard bearer in the IP networking business, Cisco (CSCO) gets a lot of eyes on it. Despite a somewhat soft market for corporate spending, IT dollars have been flowing in the last several years as new trends like cloud computing up the infrastructure that firms need to offer customers. That's helped spur on the solid growth rates that Cisco's been booking in each of the last four years.

A big installed base gives Cisco an inherent advantage in selling its big-ticket networking components. Because IT departments want minimal headaches when adding onto their infrastructure, going with a single vendor is typically the most painless approach -- and that's boosted customer stickiness for CSCO. That's not to say that there hasn't been increased competition lately; as enterprise IT spending continues to climb higher, more firms want to eat Cisco's lunch. To avoid that, the firm is going to have to keep innovating.

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