You've probably heard of the "January Effect," the phenomenon that seemingly causes stocks, particularly small caps, to surge in the first month of the year. In theory, investors and institutions sell securities in December for tax-harvesting reasons and then buy them back the following month. As a result, the stocks jump in price.
Yet what about other months? Retailers, for example, have some seasons that perform better than others, simply because of the nature of the business. Some stocks even do better in April.
Whatever the reason, investing based solely on the calendar is not a Foolish strategy. Back-testing and data-mining can turn up nearly any causal relationship we want, if we search hard enough. Still, wouldn't it be great to know ahead of time which stocks performed best at what times?
On Motley Fool CAPS, more than 98,000 investors have weighed in more than 5,600 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. The following five companies seem to do best in April:
|
Stock |
Market Cap |
Avg. % Return, April |
Avg. % Return, Rest of Year |
CAPS Rating (Out of 5) |
YTD Return |
|---|---|---|---|---|---|
|
Superior Energy Services |
$3.59 billion |
12.70% |
1.05% |
***** |
29.14% |
|
Weatherford International |
$27.36 billion |
6.41% |
2.22% |
***** |
17.27% |
|
JB Hunt |
$3.98 billion |
8.74% |
2.43% |
** |
16.28% |
|
Baker Hughes |
$25.89 billion |
6.60% |
1.29% |
***** |
3.39% |
|
USG |
$3.52 billion |
17.60% |
4.36% |
**** |
(0.70%) |
What's driven the stellar April performance of oil-services company Weatherford, even as much of the rest of its year tends more toward sour than sweet and light? Fellow oil-services company Baker Hughes also does well in April, but Halliburton
Except for a few days here and there, the year has been off to an ugly start for many stocks. Most of the companies on our list have been doing well so far, but if April really is their month to shine, let's see which ones seem most likely to live up to the promise.
Weathering the competition
Weatherford recently turned in a quarterly result that beat analyst expectations and showed that its geographic dispersal allowed it to offset the weakness being experienced in the North American market. The erosion of the North American segment affected BJ Services'
Now that we're in a period of high oil prices, companies servicing the oil industry should reap a windfall. As a result, companies such as Weatherford seem well-positioned to weather the effects that such prices could have on the economy. CAPS player Sly2Slim saw back in January that the oil companies need to invest in the equipment Weatherford provides to maintain their levels of profitability:
With the world slowly realizing that it's fundamentals that are driving oil markets and not speculation (demand [outstripping] supply and heavy draw downs on reserves), oil services look poised to have another robust year. After all, the oil majors need to find new reserves while also replacing declining production from existing oil fields, which is no small task. It will demand an astronomical level of investment, which is where the oil services companies come in, and [Weatherford] appears perfectly positioned to reap the rewards of this windfall.
A calming effect
Have we heard from you? At Motley Fool CAPS, every investor's opinion counts. 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?
