2 Top-Ranked Tech Stocks to Buy in December: HOOD, CLS

Zacks highlights two Zacks Rank #1 technology stocks to buy: Robinhood (HOOD) and Celestica (CLS). Robinhood beat Q3 estimates by ~20%, grew paid Gold subscribers 77% YoY to 3.9 million, total accounts to 27.9 million, ARPU to $191, and consensus adjusted EPS is projected to rise 79% in 2025 and 16% in 2026 to $2.27, supported by revenue growth guidance of ~51% in 2025 and 21% in 2026 (from $2.95B in 2024 to $5.40B in 2026). Celestica, a key AI infrastructure contract manufacturer, averaged ~20% revenue CAGR FY22–FY24 (to $9.6B in 2024), is projected to grow revenue ~26% in 2025 and 31% in 2026 to ~$16B, and is forecast to expand adjusted EPS ~52% in 2025 and 39% in 2026 amid sustained hyperscaler AI demand and an improved 2026 estimate post-Q3.

Analysis

Market structure: Winners are AI-infra OEMs and EMS providers (Celestica/CLS) and retail platforms monetizing higher activity (Robinhood/HOOD); hyperscalers and component suppliers also benefit. Losers include legacy brokerages that fail to monetize active retail flows and contract manufacturers without AI-capacity investments. The near-term supply/demand balance points to tight supply for AI-grade components (accelerators, fast memory) and lumpy EMS capacity — expect order-book volatility and backlog-driven revenue recognition over 1–4 quarters.

Risk assessment: Tail risks include regulatory action on retail execution/payment-for-order-flow for HOOD, a 30–50% revenue hit for CLS if two hyperscalers pause builds, or a macro regime where Fed refuses to cut and multiples compress 20–30%. Immediate risks (days): profit-taking; short-term (weeks–months): earnings/guide misses; long-term (quarters–years): secular adoption but concentrated customer risk. Hidden dependencies: HOOD’s ARPU tied to crypto/futures activity; CLS reliant on 3–5 large customers (contract concentration).

Trade implications: Direct plays — initiate staged 2–3% portfolio longs in HOOD and CLS, using 6–12 month timeframes; hedge with 1–2% of portfolio in protective puts if entry price spikes. Options — for HOOD, buy 9–12 month LEAPS or 3–6 month call spreads 5–15% OTM to capture EPS re-rating; for CLS, prefer buy-and-hold with covered-call overlays after 20% unrealized gains. Rotate sectors: overweight AI infra, fintech; underweight legacy broker/operator exposure.

Contrarian angles: Consensus understates customer-concentration and volatility in capex cycles — CLS’s 4,000% run suggests >40% short-term mean reversion risk if hyperscalers defer. HOOD’s growth assumes sustained ARPU; a 15% drop in crypto/trading activity would materially cut 2025 EPS momentum. Monitor NVDA and hyperscaler capex calls as lead indicators of demand reversals.

Key Decisions for Investors

• Establish a staged long position in CLS equal to 2–3% of portfolio over 4 tranches in the next 4 weeks; if CLS falls >20% from entry, add a second 1–2% tranche (expect mean-reversion/pullback risk).
• Establish a staged long position in HOOD equal to 2–3% of portfolio, using 6–12 month LEAPS (buy Jan 2026 calls) or 3–6 month call spreads 5–15% OTM; size to risk no more than 2% capital per option trade.
• Pair trade: Long HOOD (2%) / Short SCHW or IBKR (1–1.5%) to express retail share shift — rebalance if HOOD outperforms by >30% or if SCHW outperforms by >15%.
• Risk hedge: Buy protective puts (3–6 month, ~10–15% OTM) equal to 0.5–1% of portfolio on combined HOOD+CLS allocation; reduce hedge if implied volatility >+40% vs 30d realized.
• Catalyst watchlist — act or trim positions on these triggers: (1) HOOD monthly active accounts or ARPU drops >10% MoM; (2) CLS Q reports showing >10% decline in hyperscaler backlog; (3) Fed signals no cuts into H1 2026 — pare positions by 25% if any trigger occurs.