Top Stocks of the Week: Enphase, Broadcom, and Vertex Soar

The Santa Claus rally continues as the S&P 500 rises for 7 consecutive weeks. It was the longest weekly gain since 2017, according to Dow Jones data.

The S&P 500 rose 2.5% last week to 4,719. As of Friday’s close, it was down 78 points from its all-time high of 4,796 points on January 3, 2022. The S&P 500 is up 12.5% ​​since November 1 and up 3.3% since December 1. One.

The Dow Jones Industrial Average also rose 2.9% last week, ending the week at an all-time high of 37,305. The Nasdaq also had a good week, rising 2.8%.

The Nasdaq is up 41% from Monday to date, the S&P 500 is up 23% YTD and the Dow is up 12% this year.

A big catalyst last week was the Federal Reserve’s decision not to raise interest rates for a third straight time, fueling sentiment that the tightening cycle is over. The top three companies in the S&P 500 last week were:

1. Enphase Energy, up 20.3%

Enphase Energy (NASDAQ:ENPH) is a volatile stock, having plummeted about 53% so far this year. However, it has gained about 63% since November 1 and is currently trading at around $124 per share. Last week was the best performance in the S&P 500, up 20.3%.

One of the biggest catalysts since then was the Department of Energy’s announcement of $3.5 billion in funding to boost domestic production of battery storage devices. But the bigger driver recently has been the Fed, and last week as well.

Enphase is a clean energy company that generates most of its revenue from microinverters for residential solar panels and battery storage systems. High interest rates were Enphase’s killer on two fronts. They have increased borrowing costs for growing companies, but they have also hurt the market because higher interest rates make borrowing and leasing for solar panels more expensive.

So it was good news for Enphase that the Fed kept interest rates on hold for a third straight session and the dot plot showed three rate cuts likely in 2024 and more likely in 2025.

2. Broadcom, up 19.6%

Broadcom (NASDAQ:AVGO) has been surging all year. Shares have surged about 102% year to date, including a 19.6% gain last week, rising to $1,130 per share after closing last week at $944 per share. Broadcom is a semiconductor and software company that, among other things, makes semiconductors for data center switches and routers. The company’s stock price has soared since it reported strong fourth-quarter results on December 7.

Broadcom reported a 4% year-over-year increase in revenue and an 8% increase in revenue in fiscal 2023, to $35.8 billion. Net income for the quarter increased 4.9% to $3.5 billion, or $8.25 per share, and net income for the year increased 23% to $14.1 billion, or $32.98 per share.

In late November, Broadcom acquired VMware, which makes cloud computing software. CEO Hock Tan called the acquisition “transformative” for Broadcom.

“The VMware acquisition is groundbreaking,” he declared. “In fiscal 2024, we expect Semiconductor to maintain mid- to high-single-digit revenue growth, with VMware’s contribution increasing consolidated revenue to $50 billion and adjusted EBITDA to $30 billion.”

If Broadcom’s revenue reaches $50 billion, it would be a nearly 40% increase compared to fiscal 2023.

Broadcom got help last week when Citigroup (NYSE: C) upgraded it to Buy and BofA Securities raised its price target from $50 to $1,250 per share.

3. Vertex Pharmaceuticals, up 17.3%

Vertex Pharmaceuticals (NASDAQ:VRTX) had good news about one of its treatments, which sent its stock up 17.3% last week to over $400 per share. It’s up about 38% YTD.

On December 8, the U.S. Food and Drug Administration (FDA) approved CASGEVY, Vertex, a treatment developed with CRISPR Therapeutics to treat sickle cell disease. It is the first CRISPR-based gene editing therapy approved in the United States.

Then, last Friday, the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion on CASGEVY’s conditional approval. If approved, Vertex says this will be the only gene therapy for sickle cell disease in Europe. An approval decision is expected to be made in February.

There was more positive news last week as Vertex received positive results from a phase 2 study for VX-548, a NaV1.8 inhibitor for patients with painful diabetic peripheral neuropathy (DPN). The study found that VX-548 produced a “statistically significant and clinically meaningful reduction” in pain in users who participated in the study.

Of the three, Broadcom appears to be the best buy right now, with a reasonable valuation and plenty of growth potential. But Vertex is worth keeping an eye on because approval in Europe could be another shock.