A Shower of April Profits

You've heard of the "January Effect," in which investors sell stocks in December for tax reasons, only to buy them back in January, causing their price to jump.

All year long, we look at stocks that do better in other months. For retailers, some seasons are better than others; that's the nature of the business. And some stocks actually do best in April. 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 in what months?

On Motley Fool CAPS, more than 130,000 members have weighed in on about 5,300 stocks, awarding five-star ratings to the companies that most command their confidence. We've paired their opinions with data going as far back as five years to see which stocks perform best in each month. These five companies seem to do their best in April:

Stock

Market Cap

Avg. % Return-April

Avg. % Return-Rest of Year

CAPS Rating (out of 5 max)

LTM Return

Career Education (Nasdaq: CECO  )

$2.0 billion

11.58%

(1.29%)

**

36.77%

Cummins (NYSE: CMI  )

$6.1 billion

11.92%

0.75%

****

(38.96%)

Peabody Energy (NYSE: BTU  )

$6.7 billion

12.20%

1.31%

****

(62.07%)

Atlas Energy Resources (NYSE: ATN  )

$870.5 million

16.30%

(4.49%)

*****

(68.09%)

Bucyrus (Nasdaq: BUCY  )

$1.4 billion

13.28%

0.42%

*****

(84.11%)

Sources: America Online, Motley Fool CAPS; LTM = last 12 months.

What makes secondary education provider Career Education go to the head of the class in April? Rival Apollo Group (Nasdaq: APOL  ) does better in November, underscoring why we don't recommend simply using this as a list of stocks to buy or sell. Consider it instead as a platform for further research. We may need to look closer for a reason; Career Education's two-star CAPS rating suggests investors think it may not be up to snuff. But if these companies really do well in April, let's take a look at one of them to see why that might be.

Building bridges
Despite the drop in energy prices, the Marcellus shale formation -- and all of the Appalachian Basin, for that matter -- remains an important component for the natural gas industry. Atlas Energy Resources may not be the largest company exploiting the resource there, but the Motley Fool Income Investor recommendation is looking to expand its reach..

Currently, Atlas operates 120 wells on 550,000 acres, including 227,000 in Southwestern Pennsylvania. (Range Resources has 1.4 million acres under lease for Marcellus drilling). Production growth there has already generated a 30% increase in Atlas Energy Resources' gathering system's throughput over the past year. A midstream joint venture with Williams (NYSE: WMB  ) will service not only Atlas' assets -- and the equivalent of as much as 4 trillion to 6 trillion cubic feet of resources it estimates it has on the land -- but also those of other producers in the Appalachian Basin.

Investors may be thinking along the lines of Range Resources' CEO, who predicts the Marcellus formation will outstrip the Barnett one in Texas. CAPS member tthwebster examined the potential growth there for Atlas:

Four Zacks analysts rate a "Strong Buy". Good dividend at this point makes ATN particularly attractive. Energy coming into play in my estimation makes for a sector bet. … Announced 4/1/09 acceleration of the Marcellus Shale expansion project. Currently 34% institutionally held although no significant insider purchases recently. Revenue increasing approximately 50% each of last two years. P/E at 6 and debt/equity is less than 1. Not surprisingly ATN debt increased modestly over last couple of quarters to bring the LT debt to nearly 1B. Overall, I believe this a safe bet to outperform by fall of '09 through spring '10.

A calming effect
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. It's free to sign up and express your investing opinions, so why not use this opportunity to take your star turn?

Atlas Energy Resources is a Motley Fool Income Investor pick. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.


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