Stocks to Buy in December. Part I.

Li Auto (LI)

Entry: Unlock

Price target: 26.50-27.00

Second PT: Unlock

Analysis done on hourly timeframe. China’s electric vehicle market is crowded, but Li Auto stands out as a clear leader with fundamentals that position it as a top contender. Compared to rivals like Nio and XPeng, Li Auto excels in key metrics such as revenue growth and profitability. The company’s revenue has surged from just over $1 billion in 2020 to more than $17 billion last year. Unlike many of its peers—both domestic and international, including U.S.-based Rivian and Lucid—Li Auto posted a full year of profitability and is on track to deliver positive net income again this year.

Li Auto’s financial health is equally impressive. Its balance sheet boasts a strong 2:1 asset-to-liability ratio, with $20 billion in assets against $11.7 billion in liabilities. Additionally, the company has demonstrated excellent cash flow management, growing free cash flow to $6.22 billion—a testament to the competence of its leadership team.

Despite these achievements, concerns about U.S.-China relations have kept some investors wary. Fear of delisting—recently revived by Trump’s re-election campaign—has led American investors to overlook high-performing Chinese stocks like Li Auto. However, similar concerns during Trump’s first term proved largely overblown. While investing in Chinese equities carries geopolitical risk, that’s true of any foreign investment. As interest rates decline and risk appetite increases, it’s unlikely that winners like Li Auto will be ignored for much longer.

Please note that this may take beyond this week to come around to price targets. 

Iris Energy (IREN)

Entry: Unlock

Price target: 15.50-16.00

Second PT: Unlock

Analysis done on daily timeframe. Data centers are among the hottest trades this year, driven by surging demand fueled by the rapid growth of artificial intelligence. While industry giants like IBM, Oracle, and Dell have emerged as key beneficiaries, smaller, lesser-known companies are gaining attention from investors seeking "hidden gems." Iris Energy is one such standout, operating institutional-grade data centers powered entirely by renewable energy.

What sets Iris Energy apart is its dual focus on two high-growth sectors: data centers and renewable energy. As major players like Google and Amazon explore nuclear energy to power their expansive data centers, Iris Energy’s commitment to renewables makes it a compelling contender. The company’s financials further highlight its potential. Despite its relatively small size, Iris Energy has posted impressive revenue growth—up 148% at the close of its fiscal year and another 53% in its most recent quarterly earnings, the first of its 2025 fiscal year.

The strength of Iris Energy’s balance sheet is equally notable, with over $1 billion in assets against just $55 million in liabilities—a remarkable feat for a company valued at $2.5 billion. This robust financial position enhances its appeal as a high-reward investment in the data center and renewable energy sectors.

However, investors should be mindful of the risks. As a young, small-cap company, Iris Energy is still in its early stages, and sustained long-term success is yet to be proven. For now, its short-term potential is attractive, especially given the growing excitement around data centers and clean energy. Iris Energy may not yet be a long-term hold, but it offers a promising opportunity for those seeking exposure to these booming industries.

Please note that this may take beyond this week to come around to price targets.