The Best Momentum Stocks to Buy in December

Sanmina Corporation (SANM) is presented as a Zacks Rank #1 momentum pick following its late-October acquisition of ZT Systems from AMD and a Q4 FY25 beat-and-raise: sales rose >7% and adjusted earnings climbed 14% year-over-year. Zacks projects revenue to jump 72% in FY26 and 14% in FY27 with adjusted EPS up 60% and 19% respectively; consensus EPS estimates have risen ~39% for FY26 and ~43% for FY27 since initial releases. SANM stock has rallied ~100% in 2025 (560% over the past decade) and currently trades roughly 12% below Zacks’ average price target, underpinning bullish investor positioning around AI/cloud demand and the transformative scope of the ZT Systems acquisition.

Analysis

Market structure: Sanmina (SANM) is a direct beneficiary of accelerated AI/cloud server buildouts — the ZT Systems acquisition gives scale in chassis/AI infrastructure and shifts share away from smaller EMS peers (e.g., FLEX, JBL). Expect short-term pricing power on chassis/system assembly but upward pressure on component procurement (GPUs, PSUs, copper) that could keep input-cost volatility elevated. Risk assets could see mild risk-on outperformance; expect credit spreads for large EMS to tighten and implied equity vols for SANM to compress if execution is steady.

Risk assessment: Key tail risks are execution/integration failure on ZT, GPU supply constraints, and customer-concentration demand shocks (loss of 1 large cloud OEM could cut FY26 revenue >20%). Near-term (days-weeks) risk is sentiment reversal (5–15% pullback); medium term (3–12 months) is delivery and margin realization versus +72% FY26 revenue consensus; long term (>12 months) is capex and working-capital strain that can erode FCF if growth lags. Catalysts: SANM quarterly guide, NVIDIA/AMD GPU supply updates, large cloud contract announcements.

Trade implications: Direct play — establish a measured long in SANM (1–2% NAV) sized for a 20% stop; target 30–50% upside in 6–12 months if execution confirms consensus. Pair trade — long SANM vs short FLEX (FLEX) or Jabil (JBL) 0.75/0.75% NAV to express share shift; unwind if relative underperformance reverses >10% in 30 days. Options — buy 6–9 month call spread (ATM to +30% OTM) to cap cost or buy ATM calls and finance with 20% OTM short calls; use a 15–20% put hedge on initial build.

Contrarian angles: Consensus prices in near-perfect execution — SANM is up ~100% YTD and may already reflect +72% FY26 revenue; a 10–20% negative surprise to GPU availability or a >20% EPS guide cut could trigger 30–50% re-rating. Historical EMS cycles show rapid rallies followed by inventory-led corrections; hidden risk is elevated NWC and capex needs post-acquisition which can compress FCF unexpectedly. Trade with explicit stop/hedge and watch two specific thresholds: (1) any SANM guide miss >10% revenue or (2) public GPU supply constraint announcements — both should trigger de-risking within 48 hours.

Key Decisions for Investors

• Establish a tactical long position in SANM equal to 1–2% of NAV within 5 trading days; set a hard stop-loss at -20% and a profit target of +30–50% over 6–12 months contingent on sequential margin expansion and revenue beats versus consensus.
• Implement a relative-value pair: long SANM (0.9% NAV) / short FLEX (FLEX) or Jabil (JBL) (0.9% NAV) to capture EMS market-share shift; rebalance or close if SANM underperforms peer basket by >10% over 30 trading days.
• Use options to control downside: buy a 6–9 month SANM call spread (buy ATM call, sell ~+30% OTM call) sized to replicate 0.5–1% NAV upside exposure; or buy ATM calls and purchase 15–20% OTM puts as a collar if owning stock outright.
• Reduce exposure to consumer-electronics EMS and rotate 1–3% NAV into semiconductor capital equipment and server/component suppliers (e.g., chassis, power supplies, copper-intensive suppliers) over the next 60 days, as AI server demand should persist but remains supply-constrained.
• Trigger-based risk management: immediately reduce SANM exposure to zero and close call spreads if (A) SANM quarterly revenue misses consensus by >10% or (B) major GPU supplier announces supply shortfall that management cites as growth limiter — execute within 48 hours of announcement.