5 Stocks With Hot June Returns

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 when they buy those securities back the following month, the prices jump.

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 June. (So much for "Sell in May, go away.")

Whatever the reason, investing based solely on the calendar is certainly not a Foolish strategy. Backtesting and data-mining can turn up nearly any causal relationship we want. Still, wouldn't it be great to know ahead of time which stocks performed best at what times?

On Motley Fool CAPS, more than 105,000 investors have weighed in on more than 5,700 stocks and awarded 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 June:

Sources: America Online, Motley Fool CAPS, Yahoo! Finance.

What's driven the better June performance of supercomputer maker Cray, even as much of the rest of its year tends to be a bit flat for the company? Do computing needs rise during the summer? Perhaps not, since IBM (NYSE:IBM), another supercomputer maker, sees its best returns in October. This is one reason we don't recommend using this list as simply a tally of which stocks to buy or sell. We just offer it as a platform for further research. But whatever the reason for the June bump, Cray's two-star CAPS rating suggests that it doesn't compute all that well with investors.

Except for a few days here and there, this has been a lackluster year, but if June really is the month to shine for these companies, let's see which of them might live up to the promise they're showing.

Fast-forward
Moving content over the Internet at blazing speeds has been a profitable business for Akamai Technologies. It's the content-delivery network that gets videos and music to seamlessly play on your computer screen. Yet where there are profits, there is also the lure for competitors, and although some analysts think competition will start placing pressure on Akamai, some smart Fools would welcome the opportunity to buy the Rule Breakers recommendation at whatever lower price such fears cause the stock to fall to.

Investors have been accelerating their approval of Akamai's products and, like CAPS player gdhhayes, find that demand for more such services will only help it grow. Here's this player's pitch from last March: "[Akamai] is on the ground in the right market that is growing but still hasn't begun to reach its potential. Live and on-demand streaming videos is poised to be a big boom in the tech industry and will grow even more over the next few years."

CAPS All-Star huddaman acknowledges that disruptive technology may indeed come along, but that until then, Akamai is where the industry is at:

The real question for me with [Akamai] is not whether it will go up and beat the S&P from here on out, but what should I do with the stock when it [does]. ... [The company speeds] up the content [on] bandwidth hungry websites, like iTunes and Netflix and even Fool.com. They are minting money and no matter where the economy goes, the internet traffic would continue to grow. Only risk is, some disruptive technology that replaces the need for [Akamai].

A calming effect
At Motley Fool CAPS, every investor's opinion counts, including yours. It's free to sign up and express your investing opinions, so why not use this opportunity to take your star turn?