5 Stocks to School the Market

You've heard of the "January Effect," where investors sell stocks in December for tax reasons, only to cause prices to jump when buy the stocks back in January.

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:

Sources: America Online, Motley Fool CAPS.

We don't recommend using this as simply a list of stocks to buy or sell. Just use it as a platform for further research.

What's driven the outsized September performance of The Korea Fund -- an exchange-traded fund that invests across a broad range of Korean industries -- while the rest of the year is essentially flat? We need to look closer for the reason, but its three-star CAPS rating suggests that investors think it may be worth a look. But if September really is the month for these stocks to school the market, let's see which of the companies might live up to that promise.

Attention, class!
You'd think the economic malaise would eventually hit the rich. To a certain extent, it has, but Motley Fool Hidden Gems recommendation Sotheby's has still been insulated from the downturn in a way that eBay (NASDAQ:EBAY) never could. Because of the vast wealth that oil has created around the world, it's not only Arab sheiks but also Russia's oil barons too continue to fuel the high demand for rare and beautiful works of art. According to auction-house rival Christie's, foreign buyers made up half of the sales at its contemporary art auctions last year, more than double the number four years ago.

It's just that sort of rationale that has led CAPS member cmolinel to say that although there may be the occasional hiccup, the cash will continue to flow to Sotheby's.

Its customers are wealthy and fanatics of fine art. They could see some reductions in their income and in their assets (stocks and properties), but there are many new fortunes being made [among people in] Asia, Russia, etc. who will look to [acquire] art objects. Sales will probably not grow significantly (next quarter an exception) but cash flow will continue coming.

Meanwhile, as PotashCorp of Saskatchewan (NYSE:POT) and Mosaic (NYSE:MOS) garner much of the attention in the field of agricultural fertilizer, it can be easy to forget that another key component of fertilizer enrichment is nitrogen. Terra Industries is the leading producer of ammonia, the simplest form of nitrogen fertilizer and the feedstock for the production of other nitrogen fertilizers. Natural gas is used in the production of ammonia, and its rapid price decline ought to reduce the cost inputs for Terra and lead to expanding margins. The company was able to achieve substantial growth in 2007 precisely because of a stable market for natural gas.

All-Star CAPS member jstegma figures that kind of performance is going to continue, since demand for agricultural products -- and, hence, fertilizer -- is not going to be diminished any time in the near future.

Ag boom is just the beginning of a longer term trend. There is no "alternative food" option on the table if the prices of crops go up. Eat less maybe? Have less people on the planet? Eat non-agricultural products?

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?