As the year draws to a close, investors traditionally turn their attention to the so-called "Santa Claus rally," a period that covers the last five trading days of December and the first two of January, when equities have historically tended to rise. The key question is whether investors can count on this seasonal effect and which segments of the market have delivered the most consistent results. For Oninvest, analyst Aldiyar Anuarbekov has looked at how small-cap ETFs have behaved during this window over the last 15 years and compared those patterns with the performance of individual stocks from the Russell 2000.

Small caps and the Santa Claus rally: What the data shows

Investing in small-cap stocks could prove a winning strategy in 2026, <a href="https://www.barrons.com/articles/small-cap-stocks-earnings-interest-rates-2f7c13f7?mod=RTA">writes</a>&nbsp;Barron’s. Over the past month, the <a href="https://finance.yahoo.com/quote/%5ESP600/">S&amp;P SmallCap 600 index</a> has outperformed the large-cap <a href="https://finance.yahoo.com/quote/%5EGSPC/">S&amp;P 500</a> by a wide margin. Analysts believe small-cap momentum could continue next year, supported by potential further Fed rate cuts, lower borrowing costs, and stronger economic activity.

'Let the good times keep rolling': Barron's highlights drivers for small caps in 2026

Tilray Brands, Inc.

Trulieve Cannabis Corp.

Green Thumb Industries Inc.

Trump is reclassifying cannabis as a less dangerous drug at the federal level

Despite Trump executive order, pot stocks dip as traders take profit

Birkenstock Holding plc

Thanks to strong consumer demand, German sandal maker Birkenstock <a href="https://www.birkenstock-holding.com/news/birkenstock-reports-fiscal-2025-revenue-growth-ahead-of-target-outperforming-adjusted-ebitda-and-earnings-growth/babd968c-dc9f-4853-8266-abf50e04088d">reported</a>&nbsp;an 18% increase in annual sales, beating its own forecast. However, the company said it now expects sales growth of 13-15% in the next fiscal year, below Wall Street <a href="https://www.bloomberg.com/news/articles/2025-12-18/birkenstock-sales-climb-as-shoppers-snap-up-its-sandals-clogs?srnd=homepage-europe&amp;sref=Y0jVLcFo">expectations</a>. Against this backdrop, Birkenstock shares <a href="https://finance.yahoo.com/quote/BIRK/">have slid</a> 13% in early trading on Thursday, December 18, in New York.

Birkenstock reports record sales in 2025, but guidance for 2026 weighing on shares

D-Wave Quantum Inc.

IonQ, Inc.

Quantum Computing Inc.

Rigetti Computing, Inc.

Shares of quantum computing company D-Wave could rise about 40% over the next two months, Freedom Broker argues in a short-term trade idea seen by Oninvest. A potential increase in U.S. government involvement in the sector is seen as the key growth driver. At the same time, concrete details remain limited, as “sector shares are capable of reacting sharply even to rumors,” and market dynamics “largely determined by sentiment,” Freedom wrote. Year to date, D-Wave shares have about <a href="https://finance.yahoo.com/quote/QBTS/">doubled</a>,&nbsp;yet Wall Street believes the rally is not over.

Freedom: D-Wave offers 40% upside on two-month horizon amid U.S. government support

Curaleaf Holdings, Inc.

Shares of cannabis companies jumped on Tuesday, December 16, after U.S. President Donald Trump <a href="https://edition.cnn.com/2025/12/15/politics/marijuana-white-house-reschedule">said</a>&nbsp;the White House was “very strongly” considering changing the classification of marijuana to a less dangerous drug, which he claimed would “lead to tremendous amounts of research.”

Cannabis stocks rally as Trump 'very strongly' considering reclassifying marijuana

Lemonade, Inc.

Morgan Stanley has <a href="https://www.msn.com/en-us/money/other/lemonade-upgraded-to-equal-weight-from-underweight-at-morgan-stanley/ar-AA1SsuNC">upgraded</a>&nbsp;from "underweight" to "equalweight" mid-cap insurer Lemonade while setting the <a href="https://www.marketwatch.com/investing/stock/lmnd/analystestimates?mod=mw_quote_tab">most optimistic target price</a> on Wall Street. The company is showing sustained growth in its auto insurance business and is steadily moving toward EBITDA profitability, the investment bank argued. Against this backdrop, Lemonade shares jumped more than 8% on Tuesday, December 16.

Morgan Stanley upgrades insurer Lemonade to 'equalweight', sets $85 per share TP

ABIVAX Societe Anonyme

The YTD gain for the French biotech is still almost 1,300% 

STOXX 600 YTD leader Abivax tumbles 10% in a day on 9m25 earnings

Nektar Therapeutics

Pfizer Inc.

Eli Lilly and Company

AbbVie Inc.

Freedom Broker has issued a short-term investment idea to buy shares of Nektar Therapeutics, a small-cap biotech developing a drug for alopecia areata, an autoimmune condition that causes hair loss. On Tuesday, December 16, the company is set to <a href="https://ir.nektar.com/news-releases/news-release-details/nektar-hold-conference-call-discuss-topline-results-36-week">release</a>&nbsp;new clinical trial data on its lead therapy. If the results are positive, Nektar shares could gain about 22% over the next two months, Freedom Broker analysts said.

Freedom Broker: Nektar may jump 22% in two months on potential upbeat trial results

Luminar Technologies, Inc.

AB Volvo (publ)

Luminar Technologies, a small-cap manufacturer of lidar sensors used by vehicles to detect objects in their surroundings, <a href="https://finance.yahoo.com/quote/LAZR/">plunged</a>&nbsp;more than 60% to an all-time low on Monday, December 15. The company, whose IPO <a href="https://www.wsj.com/business/autos/luminar-rises-in-market-debut-making-25-year-old-founder-a-billionaire-11607027565?mod=article_inline">turned</a>&nbsp;founder Austin Russell into a billionaire at age 25, announced&nbsp;it had <a href="https://investors.luminartech.com/news-events/press-releases/detail/110/luminar-technologies-inc-initiates-voluntary-chapter-11">filed</a>&nbsp;for Chapter 11 bankruptcy protection and plans&nbsp;to sell its lidar business, while separately <a href="https://investors.luminartech.com/news-events/press-releases/detail/111/luminar-announces-sale-of-photonics-business-to-quantum">agreeing</a> to sell its semiconductor unit to Quantum Computing. The filing <a href="https://www.wsj.com/articles/luminar-technologies-files-for-bankruptcy-8144ddf8?siteid=yhoof2">came</a>&nbsp;roughly one month after the company's largest customer, Volvo, reportedly&nbsp;<a href="https://www.sec.gov/Archives/edgar/data/1758057/000175805725000020/lazr-20251114.htm">terminated</a>&nbsp;a purchase agreement.

Lidar-maker Luminar files for bankruptcy one month after losing Volvo supply contract

REV Group, Inc.

Vox Royalty Corp.

Black Diamond Therapeutics, Inc.

Contango Ore, Inc.

Aviat Networks, Inc.

Freedom Broker has named five small caps that investors should watch ahead of a potential "Santa Claus rally" – the <a href="https://get.investors.com/infographics/santa-claus-rally/">calendar effect</a> involving a rise in stock prices during the last five trading days in December and the first two in January.&nbsp;

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

Small-cap stocks could outperform both Big Tech shares and the broader S&amp;P 500 index in 2026, according to <a href="https://www.bloomberg.com/news/articles/2025-12-15/riskier-small-caps-seen-outperforming-in-2026-on-growth-outlook?srnd=homepage-europe&amp;sref=Y0jVLcFo">Wall Street analysts cited by Bloomberg</a>. Polar Capital America says small caps are an attractive place to invest after years of being overlooked, while JPMorgan argues markets are approaching what it calls "the best stock-picking era we have seen in our lifetime."