Buy These 5 Low-Leverage Stocks Amid a Reversal of Santa Claus Rally

On Dec. 29, 2025 U.S. indices slipped as declines in large tech names including Oracle, Nvidia and Palantir weighed on market sentiment and spoiled expectations for a year‑end 'Santa Claus' rally, prompting a defensive tilt. Zacks screened for low‑leverage stocks and highlighted five picks: Engie (ENGIY; 2025 EPS est +28.5%, Zacks Rank #2), Hamilton Insurance (HG; net premiums +16.5%, Q3 operating EPS $1.20 vs $0.16, revenue est +20.8%, Zacks Rank #1), Hecla Mining (HL; 2025 revenue est +42.1%, EPS est +281.8%, Zacks Rank #2), ResMed (RMD; fiscal‑2026 sales est +8.4%, FDA clearance for AI‑enabled PTCS, Zacks Rank #2) and Siemens Energy (SMNEY; announced repurchase up to ~$6.9bn/€6bn, fiscal‑2026 revenue est +16.9%, EPS est +158.2%, Zacks Rank #1). The note signals a modest but actionable sentiment shift toward defensive, low‑debt names driven by weakness in AI‑driven tech rather than a major structural market event.

Analysis

Market structure: The sell-off is concentrated in AI/exposure names (NVDA, ORCL, PLTR) and is driving a tactical rotation into low‑leverage, cash‑generative sectors — insurance (HG), miners (HL), med‑tech (RMD) and utilities/renewables (ENGIY/SMNEY). Mechanically this reduces short‑term pricing power for AI hardware (near‑term capex cadence risk) and increases bid for safe‑haven real assets (gold/silver) and cash flow plays; expect 5–10% relative underperformance by large AI names over the next 2–8 weeks if earnings guidance disappoints. Cross‑asset: risk‑off should push 10yr Treasury yields down ~5–25bps, USD firmer, gold/silver up 3–8% and industrial metals softer on capex pause signals.

Risk assessment: Key tail risks include an abrupt AI demand reacceleration (data‑center restocking) that would snap back NVDA/NVIDIA peers, regulatory clampdowns on AI monetization, and operational setbacks (mine permitting, insurance catastrophe losses). Time horizons matter: days—volatility spikes and option re‑pricing; weeks/months—Q4/2025 earnings and guidance; quarters—secular capex trajectory and Siemens buyback execution through FY2028. Hidden dependencies: semiconductor supply chains, reinsurance loss cycles for HG, and commodity price sensitivity for HL are second‑order drivers that can amplify moves.

Trade implications: Tactical allocation: tilt portfolios away from top‑heavy AI exposure by reducing NVDA/PLTR/ORCL weights by 25–40% over 1–2 weeks and redeploy into HG (insurance premium momentum), HL (gold exposure) and RMD (AI‑enabled FDA catalyst) with 1–3% per position sizes. Use options: buy 3‑month NVDA 5–10% OTM puts (size 25% of equity replacement) to hedge; buy 9–12 month HL or RMD calls (or buy‑write equity to fund cost) to capture asymmetry. Pair trade: long HG or HL vs short NVDA/PLTR for 3–6 months to isolate risk‑off beta.

Contrarian angles: The market may be overstating permanent demand loss for AI hardware — short‑term guidance misses can be followed by strong rebounds (see 2019/2022 tech drawdowns). Conversely, safe‑haven crowding can leave commodities/miners vulnerable if the Fed tightens and real rates rise; don't size HL or ENGIY beyond 3% without metal/FX hedges. Underappreciated catalysts: Siemens buyback (€6bn) and ResMed’s FDA AI clearance are 6–18 month upside drivers that could surprise consensus if execution is steady.

Key Decisions for Investors

• Reduce NVDA/PLTR/ORCL exposure by 25–40% within 1–2 trading days; implement protection by buying 3‑month NVDA 5–10% OTM puts sized at 25% of the notional equity reduction to cap downside over the next earnings cycle.
• Establish a 2–3% long position in Hamilton Insurance (HG) via straight equity or 6–12 month call spreads (buy 1.5% notional, sell 0.5% to fund) targeting +20–30% upside in 6–12 months; set a hard stop at −12% or sell into catastrophe loss headlines.
• Allocate 1–2% to Hecla Mining (HL) as a real‑assets hedge: consider buying 9–12 month LEAP calls (or 100% equity with a 15% stop) targeting a 30–50% payoff if gold/silver rise; reduce position if gold rallies >15% (take profits incrementally).
• Add 1–2% long ResMed (RMD) to capture the FDA AI product catalyst: prefer 9–12 month call spreads funded by selling short‑dated calls (sell 6–8 week calls) to monetize near‑term volatility; target 25%+ return on catalyst realization.
• Initiate a relative trade: long SMNEY (or ENGIY) 2% vs short NVDA 1–2% for 3–6 months to play buyback/renewables & low leverage vs AI pullback; rebalance if NVDA implied vol drops >30% from current levels or Siemens buyback execution slows materially.