This year's prospects of a Santa Claus rally appear to be brightening as the economic landscape continues to clear and consumers recapture their confidence.

Wall Street has long prospered from a strong fourth quarter, owing to an uptick in consumer spending, but 2025 could see significant investment opportunities emerge as optimism for a strong end to the year grows.

Market analysts have been particularly bullish on the prospect of a Santa Claus rally in recent weeks, with Jimmy Lee, CEO of Wealth Consulting Group, suggesting that the S&P 500 could extend beyond 7,000 following a period of festive growth. 

Goldman Sachs has also forecasted a winter rally in a note to clients, pointing to anchored recession risks and fiscal policy easing combining to create a favorable environment for risk assets. 

Consumer confidence data can help to inform investors of how a Santa Claus rally could take shape, and experts suggest that a mixed outlook could point to more discount retailers securing higher growth. 

"The Conference Board Consumer Confidence Index fell one point lower in October to 94.6, which could mean that defensive stocks shine this festive season," suggested Iván Marchena, Senior Economist at Just2Trade. 

"With the Expectations Index, which charts the short-term outlook for income, also dropping 2.9 points to 71.5, the theme this winter is likely to be focused on doing more with less, and this will bring discount retailers to the fore."

While Wall Street investors could use the clearing macroeconomic outlook to buy into risk assets, we're likely to see consumer foot traffic favor defensive stocks. With this in mind, let's take a deeper look at three stocks that are solid pickups ahead of December and the start of a prospective Santa Claus rally: 

TJX Companies (TJX)

One of the biggest existential threats that face many budget retailers today is online shopping, where low-cost goods can be bought from companies that have greater pricing power due to a lack of brick-and-mortar locations or retail staff on the payroll. 

For TJX Companies (NYSE:TJX), the challenge of online stores isn't as strong because the company's business model of off-price brand merchandise is difficult to replicate in a digital landscape. 

This stock forms the parent company of TJ Maxx, Marshalls, and HomeGoods, and its operating model is built on obtaining low-cost brands through close-out sales, manufacturing errors, and order cancellations, which paves the way for goods to be sold at significant discounts of between 20% and 60%. 

TJX is also focused on growth and plans to build on its global presence of 5,100 stores by upping its total to at least 7,000 locations worldwide. 

With UBS recently maintaining its Buy rating for TJX with a $172 price target, the company's stores are likely to be a hit with festive shoppers looking for gift inspiration on the cheap. 

Walmart (WMT)

The leading retailer in the United States in 2024, Walmart has a major global presence with 10,000 stores across 19 countries, making it a formidable component of the Christmas market. 

Walt Disney (DIS)

Today, Disney owns a broad range of household names in entertainment, including ABC, Pixar, Marvel, ESPN, Star Wars, and Hulu. 

With masses of intellectual property and the ability to not only release movies but also turn them into their own business lines with toys, consumer products, theme park rides, and live entertainment, there's plenty of potential for further growth for the stock ahead. 

Recently, Disney has turned its Disney+ streaming service into its key focal point, which has recently begun turning a profit. As families seek out entertainment during the holiday period, Disney+ stands to be a winner. 

In its recent Q3 earnings report, Disney announced that its Disney+ and Hulu subscription services gained 2.6 million more subscribers than the previous quarter, and we can expect this growth to continue as the company uses its newfound streaming profitability to continue improving the quality of its content.

Capitalizing on Festive Opportunities

The economic landscape is clearing in the United States, leading to market analysts forecasting a Santa Claus rally. While consumer confidence continues to slip, there's growing optimism that defensive stocks can flourish in what would be a conducive environment for growth.

Upcoming consumer confidence insights could be telling as to the direction that spending takes in the weeks leading up to the holiday season, but there is mounting optimism that Wall Street will enjoy a strong end to the year. 

For investors who follow spending trends, the fourth quarter's Santa Claus rally can hold a far greater degree of upside.

Disclosure: On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer. Dmytro Spilka does not intend to make a trade in any of the securities mentioned above in the next 72 hours.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.