5 Stocks With Scary Potential

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.

But 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 October.

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 5,400 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 October:

Stock

Market Cap

Average % Return, October

Average % Return, Rest of Year

CAPS Rating(out of 5)

YTD Return

Novavax (Nasdaq: NVAX  )

$172 million

36.7%

(2.7%)

*

(16.8%)

EMC (NYSE: EMC  )

$24.6 billion

10.6%

(0.2%)

*****

(35.4%)

Apple (Nasdaq: AAPL  )

$96.7 billion

16.4%

4.7%

***

(44.9%)

NYSE Euronext (NYSE: NYX  )

$10.7 billion

18.3%

(6.2%)

*****

(54.6%)

Tesoro (NYSE: TSO  )

$2.2 billion

14%

2.6%

***

(65.5%)

Sources: America Online, Motley Fool CAPS.

What's driven the outsized October performance of biopharmaceutical Novavax, while the rest of its year is essentially a loss? Do infectious diseases become more prevalent around Halloween? Questions like these are 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. We need to look closer for the reason, but its one-star CAPS rating suggests investors think Novavax is a horror show. Still, if October really is the month these stocks manage to scare up growth, let's see which of them might live up to that promise.

Attention, class!
Maybe it's the new tech wreck -- Apple is leading a number of notable names down, including Google (Nasdaq: GOOG  ) and Amazon.com (Nasdaq: AMZN  ) . On Monday, Apple notably saw some $20 billion in market cap erased; this occurred exactly eight years after it had suffered its biggest one-day decline ever. Although analysts downgraded Apple because they foresee it losing market share as the sub-$1,000 computer market grows, CAPS member Xpar thinks they're reading the wrong metrics on the Mac maker:

The logic of the recent downgrade is skewed. Apple is competitive because of brand loyalty, customer satisfaction, and possess a unique competitive advantage. Apple has always charged a premium for their product, competitive pricing offered by low cost leaders like Dell should not erode Apple's market position.

NYSE Euronext continues to transform itself and grow, as it has now assumed ownership of the American Stock Exchange. The $260 million deal is expected to be accretive to earnings by the end of 2009, while at the same time saving the exchange some $100 million. CAPS member gonzo88 finds its consistent integration efforts happily carrying it through to the next level:

This stock is the heart of the trading system that has been used over the last 90 years plus. In addition it is in the process of updating and integrating systems that are state of the art and what the new age wants and expects. I expect that the new and the old will succesfully cooperate and this entity will flourish.

Unlike the oil companies themselves, refiners like Tesoro are hurt just as much by rising energy costs as you and I are when we fill up at the pump. Early last month, CAPS member batsum believed the dramatic fall in oil prices would lift this refiner's bottom line in the future:

The stock has been battered down badly as the 52 week high is 66. I know some people may feel this stock as a value trap but as crude oil/natural gas prices decline it should allow for TSO's bottom line to greatly benefit.

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?

NYSE Euronext and Google are Motley Fool Rule Breakers selections. Amazon.com and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


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