If you're wondering whether Wall Street's favorite tradition is back on track, the signs are looking pretty good. The prospect of a Santa Claus rally is brightening as the economic fog lifts and consumers start feeling a bit better about opening their wallets.

Wall Street has always loved the fourth quarter—consumer spending typically gets a holiday boost—but 2025 might offer particularly compelling opportunities as optimism builds for a strong year-end finish.

The bull case has been gaining steam lately. Jimmy Lee, CEO of Wealth Consulting Group, has floated the idea that the S&P 500 could push past 7,000 on the back of festive momentum. Meanwhile, Goldman Sachs chimed in with a note to clients forecasting a winter rally, citing anchored recession risks and easing fiscal policy as factors creating a friendly environment for risk assets.

Here's where it gets interesting, though. Consumer confidence data tells a more nuanced story, and that mixed picture might actually favor discount retailers.

"The Conference Board Consumer Confidence Index fell one point lower in October to 94.6, which could mean that defensive stocks shine this festive season," suggested Iván Marchena, Senior Economist at Just2Trade.

"With the Expectations Index, which charts the short-term outlook for income, also dropping 2.9 points to 71.5, the theme this winter is likely to be focused on doing more with less, and this will bring discount retailers to the fore."

So while institutional investors might use the improving macro backdrop to pile into risk assets, everyday consumers are likely to gravitate toward value plays. That dynamic sets up some interesting opportunities. Let's dig into three stocks that look well-positioned heading into December and a potential Santa Claus rally.

TJX Companies: The Off-Price Advantage

Budget retailers face a legitimate existential threat from online shopping. When consumers can buy cheap goods from companies without the overhead of physical stores or retail staff, traditional discount chains have to work harder to justify their existence.

But TJX Companies (TJX) has a built-in defense mechanism. The company's business model—selling off-price brand merchandise—is genuinely difficult to replicate online.

TJX operates as the parent company of TJ Maxx, Marshalls, and HomeGoods. The secret sauce is in the sourcing: the company snaps up inventory through close-out sales, manufacturing errors, and order cancellations, then sells brand-name goods at discounts ranging from 20% to 60%. It's a treasure hunt shopping experience that doesn't translate well to algorithms and search bars.

The growth story here is substantial, too. TJX currently operates 5,100 stores globally and has plans to expand to at least 7,000 locations worldwide.

UBS recently maintained its Buy rating on TJX with a $172 price target, suggesting the stores should attract festive shoppers hunting for gift ideas without breaking the bank.

Walmart: The Quintessential Holiday Destination

If there's a poster child for value-oriented holiday shopping, it's Walmart (WMT). The retailer has become synonymous with discount shopping for American consumers, and the holiday season traditionally amplifies that advantage. Both its online platform and brick-and-mortar presence become go-to destinations for everything from Christmas decorations to gifts and electronics.

The scale here is staggering. As the leading US retailer in 2024, Walmart operates 10,000 stores across 19 countries, making it a formidable presence in the Christmas market.

The recent numbers tell an optimistic story. Walmart posted Q3 2025 earnings per share of 58 cents, beating expectations of 53 cents. More tellingly, the company raised its full-year net sales growth forecast to between 4.8% and 5.1%—a significant jump from the earlier projection of 3.75% to 4.75%. That upward revision signals real confidence heading into the busy festive period.

Walt Disney: Value Entertainment for Families

Walt Disney (DIS) might seem like an odd pick in a lineup of discount retailers, but hear me out. The entertainment giant is actually well-positioned to capture spending from price-conscious consumers in Q4 2025 by offering relatively affordable access to movies and experiences throughout the holiday season.

Disney's empire spans ABC, Pixar, Marvel, ESPN, Star Wars, and Hulu. That's a ridiculous amount of intellectual property, and the company knows how to monetize it across multiple channels—not just movies, but toys, consumer products, theme park attractions, and live entertainment. Each property becomes its own business ecosystem.

The real story lately has been Disney+, which has evolved from a money pit into an actual profit center. As families look for entertainment options during the holiday period, a streaming service packed with family-friendly content at a reasonable monthly price becomes particularly attractive.

The momentum is visible in the numbers. In its recent Q3 earnings report, Disney announced that Disney+ and Hulu collectively added 2.6 million subscribers compared to the previous quarter. With streaming finally turning profitable, the company can reinvest those dollars into better content, creating a virtuous cycle that should sustain subscriber growth.

The Holiday Shopping Outlook

The economic picture in the United States is improving, and market analysts are increasingly calling for a Santa Claus rally. The consumer confidence data shows some softness, sure, but that's not necessarily bad news—it just changes which stocks are likely to benefit.

Defensive stocks and value retailers are positioned to thrive in this environment. As more consumer confidence data rolls in over the coming weeks, we'll get a clearer picture of spending patterns heading into the holiday season. But the early read suggests Wall Street is gearing up for a strong finish to the year.

For investors who pay attention to spending trends and consumer behavior, the fourth quarter's potential Santa Claus rally could offer outsized opportunities in these value-oriented plays.