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You've heard of the January effect, where investors sell stocks in December for tax reasons, only to buy them back in January, causing their price to jump.
Yet what about other months? Retailers, for example, have some seasons that perform better than others, simply because of the nature of their business. Some stocks even do better in August.
Whatever the reason, investing based solely on the calendar is certainly not a foolish strategy. Still, wouldn't it be great to know ahead of time which stocks performed best at what times?
- MSN CAPS: Collective wisdom at work
At MSN CAPS, more than 110,000 investors have weighed in on more than 5,500 stocks, awarding five-star ratings to the companies that most command confidence. We've paired their opinions with data going as far back as five years to see which stocks performed best in each month.
The following five stocks seem to do best in August:
| Company | Sector | Average return, August | Average return, rest of year | YTD return | CAPS rating |
|---|---|---|---|---|---|
Oil and natural gas | 89.1% | 7.8% | -6.3% | **** | |
Multimedia applications | 28.0% | 1.9% | -66.2% | ***** | |
Graphics processors | 9.3% | 2.3% | -67.2% | **** | |
Asset management | 6.6% | -1.1% | -32.2% | **** | |
Computer systems | 5.8% | 1.5% | -9.4% | **** |
Why does Oilsands Quest (BQI, news, msgs), a Canadian company that extracts low-quality oil from tar sands, burn hottest in August, while rival Suncor Energy (SU, news, msgs) sparkles most in December? Quest's four-star CAPS rating suggests that our players think the Calgary, Alberta, company will keep pumping out returns.
Still, the uncertainty involved makes the above list better as a platform for further research than a list of buy and sell recommendations. If August really is the month to shine for these stocks, let's see which of the companies might best live up to that promise.
More from MSN Money and The Motley Fool
Still, investors remain decidedly bullish about Nvidia's ability to bounce back. CAPS participant "NNoXX," for instance, thinks the market's reaction to its guidance priced the stock as if the Santa Clara, Calif., company was about to go bankrupt.
"Nvidia recently has had a lot of bad press, some of which is unfounded, as far as I can tell," NnoXX recently wrote. "(The stock) dropped from the mid $30s earlier this year to about $10.75 last time I checked. The drop was due to a bad product line, with the prediction of many returns resulting in a charge taken by Nvidia in the most recent quarter. The roll of the dice is whether the charge was enough to cover the cost of the predicted returns. One way or another, the chance of Nvidia going under is slim, and at $11 it is a steal. I could see the price doubling in the next 6-12 months."
- Multimedia: Get started with technical analysis
Falling as fast and as hard as Sigma Designs (SIGM, news, msgs) has would be enough to make anyone's head spin. There's been little encouragement from the chip maker on either the set-top-box or Blu-ray fronts, and Sigma has said full-year revenue expectations are hazy at best.
A recent legal victory by Cablevision (CVC, news, msgs), which lets viewers remotely record TV shows on the company's servers, probably didn't help. Might the proliferation of such services sound the death knell for set-top-box makers?
CAPS participants are also skeptical that Sigma Designs will go away anytime soon. With Internet-delivered TV just now gaining traction, CAPS member "Carbarns" feels that the Milpitas, Calif., company is ready to exploit the trend to the fullest.
"IPTV is just getting a foothold in the consumer's vocabulary," the CAPS player wrote. "Watching YouTube and social networking media content will blow this industry wide open, and Sigma is poised to exploit it, if they play their cards right. Watch to see in their next quarterly report if they don't offer more forward-looking financial comments."
It can pay for you to start your own research on these stocks on MSN CAPS. Read a company's financial reports, scrutinize key data and charts and examine the comments that your fellow investors have made, all from each stock's CAPS page. Your voice affects these stocks, whatever month the calendar may display. Since it's free to sign up and express your investing opinions, why not use this opportunity to take your star turn?
This article was reported and written by Rich Dupey for The Motley Fool. At the time of publication, he owned shares of Intel but none of the other stocks mentioned.
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