Freedom Broker offers five small caps ahead of potential Santa Claus rally

Freedom Broker has named five small caps that investors should watch ahead of a potential "Santa Claus rally" – the calendar effect involving a rise in stock prices during the last five trading days in December and the first two in January. 

Canada-based Vox Royalty acquires royalty interests in mining projects – primarily gold – allowing it to generate revenue without participating in mining operations and therefore without exposure to operational risks.

Vox’s latest quarterly results beat Freedom Broker’s expectations. Revenue totaled $3.8 million in the third quarter, 3.4% above forecasts, while net income of $161,673 was four times the expected figure. Freedom Broker said the results highlight exceptional operating leverage – profits are rising faster than revenue – along with a more disciplined approach to costs by the management.

This year, Vox acquired 10 royalty assets from Deterra Royalties. Freedom estimates the portfolio could generate approximately $7 million in annual royalty revenue starting in 2026. Additional growth drivers cited include pending development decisions at the Sulphur Springs and Horseshoe Lights projects, as well as new technical studies at three others.

Vox Royalty shares have five “buy” ratings from Wall Street analysts, according to MarketWatch data. The consensus target price of $6.00 per share implies upside of 12.6% versus the December 15 close.

Black Diamond Therapeutics develops oncology drugs designed to target specific tumor characteristics. In early December, the company reported positive preliminary data from a phase II clinical trial of its drug silevertinib in patients with aggressive non-small cell lung cancer with rare mutations. At the same time, the company announced plans to initiate a phase II study of silevertinib in patients with glioblastoma, a form of brain cancer with limited treatment options.

Operating expenses totaled nearly $11 million in the third quarter and came in below forecasts due to lower silevertinib development costs, Freedom Broker said. The company’s net loss narrowed nearly 50% year over year to $8.5 million. As of September 30, Black Diamond held $135.5 million in cash, which the company expects to be sufficient to fund operations into the second half of 2028.

Eight Wall Street analysts have Black Diamond shares rated “buy,” while one has a “hold” recommendation. The average target price of $9.43 per share is almost 3.5 times the most recent closing price.

Contango Ore is engaged in gold exploration and production. In 2025, the company transitioned from the capital-intensive exploration stage to commercial production and sales at its Manh Choh mine in Alaska. At the same time, its asset base offers significant upside for further production growth, Freedom Broker wrote. Additional gold reserves could be discovered at Manh Choh, while the company is also advancing two other Alaska-based projects: Johnson Tract and Lucky Shot. Success at these assets could eliminate the “single-asset discount” currently in Contango Ore’s valuation, according to the analysts.

In the third quarter, the company reported a 10% year-over-year increase in operating income to $25 million and narrowed its net loss to $5.4 million from $9.7 million a year earlier.

Five Wall Street analysts now have Contango Ore shares rated “buy,” compared to no analyst coverage a month earlier. The average target price of $35.20 per share implies upside of more than 31% versus current trading levels.

Aviat Networks focuses on two segments of the telecommunications market: private wireless networks and microwave backhaul for mobile communications infrastructure.

As digitization accelerates across industry, energy, transportation, and the public sector – alongside the expansion of 5G – demand for reliable and secure network solutions continues to grow. Freedom Broker believes Aviat is well positioned to benefit from this long-term trend.

In the first quarter of fiscal 2026, ended September 26, the company’s revenue rose 21.4% year over year to $107.3 million. Aviat posted GAAP net income of $0.2 million versus a net loss of $11.9 million a year earlier.

The company is also expanding its exposure to higher-margin service contracts and recurring revenue, which should support earnings growth and improve the sustainability of its business model, Freedom said. Seven Wall Street analysts have Aviat shares rated “buy.” The consensus target price of $35.14 per share implies upside of 67% versus the December 15 close.

REV Group designs and manufactures specialty vehicles. In 2024, the company shifted its strategic focus toward higher-margin segments – including fire trucks and ambulances – following the sale of its bus business.

For the fiscal year ended October 31, REV Group reported a 3.4% increase in revenue to $2.46 billion, while net income fell 63% to $95.2 million.

The order backlog at the specialty vehicles division – now the company’s core focus – stands at approximately $4.3 billion. According to Freedom Broker, this provides 2-3 years of production visibility and allows for more predictable revenues.

Wall Street analysts remain cautious on the stock's outlook. REV Group shares have three “hold” ratings versus one "buy." The average target price of $66.00 per share implies upside of 11.5% versus the December 15 close.

This material does not constitute individualized investment advice.