December has historically been one of the strongest months for equity markets, ranking as the third-best month for both the S&P 500 and Dow Jones Industrial Average since 1950. But while broad market strength creates a rising tide, certain stocks are showing particularly compelling momentum heading into year-end.
The most interesting opportunities often emerge when beaten-down companies suddenly reverse course. A strong earnings report, strategic pivot, or improving industry dynamics can signal that management is getting the business back on track—creating the foundation for an extended rally. These inflection points separate temporary bounces from sustainable recoveries.
Three stocks stand out for their recent momentum combined with improving fundamentals. Each is building momentum over the past month after extended periods of weakness, and each offers a distinct catalyst that could drive further gains into 2026.
Albemarle Corporation (ALB)
Market Cap: $14 billion | Currently trading around $119 | 52-Week Range: $49.43 – $132.90
Albemarle has delivered the strongest performance in the entire S&P 500 over the past month, surging 39% through early December. The North Carolina-based specialty chemicals company is one of the world’s largest lithium producers, positioning it at the center of the electric vehicle and energy storage revolution.
The stock spent most of 2025 in the wilderness, hitting a multiyear low around $49 in early June as disappointing EV sales growth weighed on lithium demand. Investors worried that the battery materials market had entered a prolonged downturn, with oversupply crushing prices and margins across the industry.
But the narrative is shifting. Albemarle’s third-quarter earnings report in early November beat Wall Street estimates for both revenue and earnings, prompting multiple analysts to raise their price targets. The company demonstrated that while EV sales remain sluggish in most markets (China being the notable exception), demand is accelerating in other lithium-dependent sectors.
Battery storage systems for grid-scale renewable energy, residential solar installations, and retail electricity solutions are all showing strong growth. These applications require the same high-quality lithium products that Albemarle produces, but without the exposure to volatile automotive demand cycles.
The company’s gross margins of 12.27% remain depressed compared to historical levels, reflecting the challenging pricing environment. However, if lithium demand continues broadening beyond EVs while supply discipline improves industry-wide, margins should expand significantly from current levels.
Albemarle also offers a 1.36% dividend yield, providing some income while investors wait for the lithium market to fully recover. The combination of multiple Wall Street upgrades, improving end-market demand, and deeply discounted valuation compared to 2021-2022 peaks makes Albemarle an intriguing turnaround candidate.
The key risk remains Chinese overcapacity in lithium processing, which could pressure prices if demand growth disappoints. But with the stock still down substantially from previous highs despite the recent rally, risk-reward appears favorable for investors betting on the long-term electrification trend.
SoundHound AI Inc. (SOUN)
Market Cap: $5.4 billion | Currently trading around $13
SoundHound AI represents a more speculative play on artificial intelligence, but the company’s recent strategic evolution could position it for a powerful rebound in 2026. The stock has fallen over 50% from its 52-week high and is down nearly 40% year-to-date, creating a potentially attractive entry point for growth investors.
The company first gained attention when Nvidia disclosed a stake during Q4 2023, sending shares soaring as investors piled into anything connected to the AI boom. However, Nvidia sold its position in Q4 2024 for substantial gains, triggering a selloff when the news became public earlier this year.
What makes SoundHound interesting now is its strategic transformation. The company started as a music recognition app before pivoting to voice AI technology. Its proprietary “speech-to-meaning” and “deep meaning understanding” technologies allow more natural interactions than traditional voice assistants, understanding intent before speakers finish their sentences.
SoundHound gained early traction in automotive voice assistants and restaurant ordering systems. But the real catalyst came with last year’s acquisition of Amelia, a provider of virtual agents for regulated industries like healthcare and financial services. This acquisition enabled SoundHound’s latest pivot: from voice AI to agentic AI.
The company is now positioning itself to offer AI agents that function as virtual employees, handling complex customer and employee interactions. This represents a massive market opportunity as enterprises move beyond simple chatbots toward AI systems that can complete multi-step tasks autonomously.
SoundHound’s competitive edge is its voice-first approach. While many companies are developing AI agents, SoundHound’s core competency in natural language processing could prove crucial. If AI agents are going to act autonomously, they need to perfectly understand human intent and context—exactly what SoundHound’s technology was designed to deliver.
The financial trajectory supports the turnaround thesis. Revenue has more than doubled through the first nine months of 2025, growing 68% in the most recent quarter. Management indicated that hitting the high end of Q4 revenue guidance would result in EBITDA profitability—a major milestone for the young company.
The risks are significant. SoundHound faces competition from tech giants with vastly more resources, and the path from EBITDA profitability to sustainable net income remains unclear. The stock’s volatility reflects these uncertainties. But for investors comfortable with growth stock risk, SoundHound’s combination of improving fundamentals, strategic positioning in agentic AI, and deeply discounted valuation creates an asymmetric opportunity.
Realty Income Corporation (O)
Market Cap: $54 billion | Currently trading around $58 | Dividend Yield: 5.5%
Realty Income offers a completely different investment profile—defensive income generation with recession-resistant characteristics. As economic uncertainty builds heading into 2026, with UBS projecting a 93% near-term recession probability, defensive positioning makes increasing sense.
The real estate investment trust operates a diversified portfolio of single-tenant commercial properties leased to high-quality tenants including dollar stores, auto repair shops, and home improvement retailers. The company’s “Monthly Dividend Company” tagline reflects its unique monthly payout schedule, making it particularly popular with retirees seeking consistent income.
Realty Income’s 5.5% dividend yield stands out in the current environment, especially compared to the S&P 500’s yield of just 1.18%. The company maintained its dividend through both the 2007 financial crisis and the 2001 dot-com collapse, demonstrating the resilience of its business model.
The REIT structure uses triple-net leases, meaning tenants are responsible for property taxes, insurance, and maintenance costs. This shifts operating risk to tenants while providing Realty Income with predictable cash flows. The company manages concentration risk through diversification—no single tenant type exceeds 11% of total rent.
Paradoxically, a recession could actually benefit Realty Income’s long-term prospects. During economic downturns, the Federal Reserve typically cuts interest rates aggressively to stimulate growth. Lower rates reduce Realty Income’s cost of capital for property acquisitions while making its dividend yield more attractive relative to Treasury bonds.
The stock enjoyed substantial rallies following both the 2001 and 2007 recessions, likely driven by this favorable monetary policy dynamic. With the Fed potentially approaching another easing cycle if recession materializes, history suggests Realty Income could outperform during the downturn and subsequent recovery.
Current valuation appears reasonable, with shares trading in the middle of their 52-week range. The 5.5% monthly dividend provides substantial income while investors wait for potential capital appreciation. For portfolios seeking defensive positioning with attractive income, Realty Income checks multiple boxes.
Positioning for Year-End
These three stocks represent distinctly different approaches to December investing. Albemarle offers cyclical recovery exposure to the electrification megatrend. SoundHound provides high-risk, high-reward positioning in agentic AI. Realty Income delivers defensive income with recession-resistant characteristics.
The common thread is recent momentum combined with catalysts that could drive sustained outperformance. Albemarle’s improving demand picture, SoundHound’s strategic transformation, and Realty Income’s rate-cut positioning all suggest these aren’t just short-term bounces—they’re potential multi-quarter stories.
December’s historical strength often extends into January as the “Santa Claus Rally” meets the “January Effect.” Stocks showing momentum heading into year-end frequently continue outperforming as new capital flows into markets. These three names offer different ways to capture that seasonal strength while positioning for longer-term trends in 2026.
