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 the business. Some stocks even do better in September. 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 115,000 members 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 September:
|
Stock
|
Market Cap
|
Avg. % Return-Sept
|
Avg. % Return-Rest of Year
|
CAPS Rating (out of 5 max)
|
YTD Return
|
|
True Religion Jeans (Nasdaq: TRLG )
|
$631.0 million
|
28.72%
|
5.78%
|
**
|
22.15%
|
|
Natural Gas Services (AMEX: NGS )
|
$230.5 million
|
22.53%
|
2.60%
|
****
|
0.51%
|
|
NGAS Resources (Nasdaq: NGAS )
|
$137.7 million
|
16.53%
|
0.70%
|
**
|
(6.39%)
|
|
Excel Maritime (NYSE: EXM )
|
$1.2 billion
|
14.19%
|
1.01%
|
****
|
(34.73%)
|
|
Immersion (Nasdaq: IMMR )
|
$188.3 million
|
14.39%
|
1.11%
|
*****
|
(52.97%)
|
Sources: America Online, Motley Fool CAPS as of 9/5/08.
What's driven the outsized September performance of natural gas E&P NGAS Resources, while the rest of the year is essentially a bust? Considering that gas producer Natural Gas Services also does well in September, it's probably a seasonal thing. But it's also one reason why we don't recommend using this as simply a list of stocks to buy or sell -- just a platform for further research. Still, while we need to look closer for the reason, Natural Gas Services' four-star CAPS rating suggests that investors believe there's something in the air. If September really is their month to school the market, let's see which of the companies above might live up to that promise.
Attention, class!
The dry bulk shipping industry is taking it on the chin these days, as concerns over an economic slowdown in both Europe and China continue to mount. Analysts, though, think the fourth quarter will show marked improvement over current conditions, and they're finding the share price declines of shippers like Excel Maritime enticing.
CAPS member Orac78 has noticed that as well, pointing out that Excel and other shippers like Navios Maritime (NYSE: NM ) are being priced as though steel, ore, and grains will never see the inside of a hull again:
This stock is getting hammered because of the bubble burst of commodities. However dryshippers are getting priced like, there will never be any more growth or commodities shipped ever. Commodities will eventually pick up again and [so] will this stock.
Independent natural-gas exploration and production company NGAS Resources focuses on drilling shallow wells, primarily in the Devonian shale formation. It uses an unconventional horizontal drilling process, but it's not alone in doing so: Kodiak Oil & Gas (AMEX: KOG ) also uses such a method in the Bakken formation, for example. The process reduces its footprint and minimizes the number of wells that need to be drilled to access the same amount of oil and gas. However, it's a more expensive process that needs to be supported by higher prices. Record production has resulted in a 33% increase in revenue in the latest quarter, which is allowing NGAS to expand drilling to as many as 50 such wells over the next year.
Those are the kinds of factors CAPS member darrell54 factored into his pitch in July, when he noted that NGAS would be pumping up the volume:
This company has reserves and its own distribution pipeline. In addition they are drilling new well and increasing production annually. The price of natural gas is low when compared to oil. The comparable price of natural gas to oil is 1/6th. If you have oil at $140 the theoretical price of gas should be $23.33. Gas has a long was to go and [NGAS Resources] will be increasing their margins as the price of gas moves up.
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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