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?
On Motley Fool CAPS, more than 110,000 investors have weighed in on more than 5,500 stocks, awarding five-star ratings to the companies that best 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 August:
|
Stock
|
Market Cap
|
Avg. % Return-Aug
|
Avg. % Return-Rest of Year
|
CAPS Rating
|
YTD Return
|
|
Oilsands Quest (AMEX: BQI )
|
$905.1 million
|
89.11%
|
7.83%
|
*****
|
(2.2%)
|
|
Sigma Designs (Nasdaq: SIGM )
|
$421.2 million
|
28.02%
|
1.90%
|
*****
|
(71.29%)
|
|
NVIDIA (Nasdaq: NVDA )
|
$6.3 billion
|
9.37%
|
2.39%
|
****
|
(66.75%)
|
|
American Capital (Nasdaq: ACAS )
|
$4.3 billion
|
6.61%
|
(1.11%)
|
****
|
(32.64%)
|
|
Hewlett-Packard (NYSE: HPQ )
|
$112.2 billion
|
5.83%
|
1.49%
|
****
|
(9.54%)
|
Sources: America Online, Motley Fool CAPS.
Why does Canadian tar-sands oil producer Oilsands Quest burn hottest in August, even as rival Suncor Energy (NYSE: SU ) sparkles most in December? Quest's five-star CAPS rating suggests that our players think it'll 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 these stocks' month to shine, let's see which of these companies might best live up to that promise.
A graphic illustration
While NVIDIA's far and away the industry leader in computer and videogaming graphics chips, tight competition from archrival Intel (Nasdaq: INTC ) is just one of the perils it faces. NVIDIA lost one-third of its value one day last month, after releasing lower revenue guidance than the market had anticipated.
Investors remain decidedly bullish about the Motley Fool Stock Advisor recommendation's ability to bounce back. CAPS member NNoXX thinks the market's reaction to the announcement priced NVIDIA as if it were about to go bankrupt:
Nvidia recently has had a lot of bad press some of which is unfounded as far as I can tell. They dropped from the mid $30's 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.
A case of vertigo
Falling as fast and as hard as Sigma Designs has would be enough to make anyone's head spin. There's been little encouragement from the chipmaker on either the set-top box or Blu-ray fronts, and Sigma itself has said that full-year revenue expectations are hazy at best. Cablevision's recent legal victory, which lets viewers remotely record TV shows on the company's own servers, probably didn't help, either. Might the proliferation of such services sound the death knell for set-top box makers?
Most investors dismiss the notion that the Motley Fool Rule Breakers recommendation will go away anytime soon. With Internet-delivered TV just now gaining traction, CAPS member Carbarns feels that Sigma Designs is set to exploit it to its fullest:
IPTV is just getting a foothold in the consumer's vocabulary. 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.
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. 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?
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