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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.
But 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 November.
Whatever the reason, investing based on the calendar is certainly not a foolish strategy. So, wouldn't it be great to know ahead of time which stocks performed best at what times?
- MSN CAPS: Tap the wisdom of the investing crowd
At MSN CAPS, more than 120,000 investors have weighed in on more than 5,400 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 November.
| Company | Sector | Market cap | Average return in November | Average return rest of year | CAPS rating |
|---|---|---|---|---|---|
Biotechnology | $2.1 billon | 20.7% | 1.2% | ***** | |
Solar modules | $10.6 billion | 49.3% | -2.5% | ** | |
Online marketplace | $16.7 billion | 5.4% | -2.3% | *** | |
Industrial metals | $1.5 billion | 11.3% | 3.5% | ***** | |
Broadcasting | $828 million | 27.5% | -6.2% | ** |
The chart shows that drug maker United Therapeutics (UTHR, news, msgs) is flush with good health in November and relatively anemic the rest of the year. What it doesn't show is that another biotech, Gilead Sciences (GILD, news, msgs), does best in February.
So, consider the above list as a platform for additional research rather than a recommendation to buy or sell individual stocks.
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That view was substantiated by Deutsche Bank (DB, news, msgs), which on Nov. 12 initiated coverage of the stock with a "buy" rating, saying it expects positive results from two clinical trials of an oral version of its drug Remodulin for pulmonary arterial hypertension. Initial results are expected early next year, Deutsche Bank said, and could provide a catalyst for the stock.
The Obama factor
How much will a Barack Obama presidency help the solar industry? Many are betting that the incoming administration's actions to reduce carbon emissions and increase oil independence will have a trickle-down effect on the solar sector. For many investors, including CAPS member "TepperJason," that equates to a boost for First Solar (FSLR, news, msgs)."(First Solar) is the only solar company that matters," TepperJason recently wrote. "(Their) only problem is they still require government funding to keep afloat, but eventually they should be able to make it without government funding. . . . (First Solar) is a winner. Ignore the high P/E."
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"Success has gone to their head," the CAPS participant wrote. "I have been buyer and seller at eBay. I just cannot see where they will make money. Here are some of the (shortcomings) I see:
- For items costing less than $50, total fees eat up 10% of sales. That is high, unless margins are quite high in the first place. I do not agree that margins are high when selling on eBay. For higher-priced items, the total cost may still run up to 7% to 8%. That's not easy on sellers; they are going to balk.
- With the high fees, one expects eBay to assume some risk of sale (like guarantee the payment). They do not. All transaction risk is transferred to sellers.
- New feedback/shipping charges/payment method policies make it even less desirable for sellers.
"Now, eBay can say they have they buyers, (and) sellers will come. But they need both sellers and buyers to be successful. No company can be successful when it squeezes its vendors out of any profit. I think this company is going down to zero."
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 none of the stocks mentioned.
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