You've probably heard of the "January Effect." Investors tend to 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 actually do best in December, despite the window-dressing going on. 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 120,000 members have weighed in on some 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 December:
|
Stock
|
Market Cap
|
Avg. % Return-Dec
|
Avg. % Return-Rest of Year
|
CAPS Rating (out of 5 max)
|
YTD Return
|
|
Tanzanian Royalty Exploration (AMEX: TRE )
|
$233.7 million
|
26.30%
|
2.27%
|
**
|
(60.1%)
|
|
LDK Solar (NYSE: LDK )
|
$1.6 billion
|
60.41%
|
(5.41%)
|
****
|
(70.2%)
|
|
China Precision Steel (Nasdaq: CPSL )
|
$54.9 million
|
387.76%
|
(5.25%)
|
*****
|
(80.7%)
|
|
Solarfun Holdings (Nasdaq: SOLF )
|
$220.1 million
|
104.77%
|
(9.80%)
|
***
|
(86%)
|
|
ATP Oil & Gas (Nasdaq: ATPG )
|
$176.6 million
|
11.44%
|
1.10%
|
****
|
(90.3%)
|
Sources: America Online, Motley Fool CAPS.
What's made China Precision Steel a better performer in December compared to the rest of the year? While AK Steel (NYSE: AKS ) appeared here last week, Nucor (NYSE: NUE ) does best in January. That's one reason why we don't recommend simply using this as a list of stocks to buy or sell -- just a platform for further research. If December really is these companies' month to shower gifts upon investors, let's see which ones above might live up to that promise.
Raining on solar's parade
It seemed that LDK Solar's fixed-rate contracts would help the company remain above the fray. But some customers are now asking the wafer supplier to start cutting prices, in light of the increasingly steep challenges facing the solar industry. Plummeting oil prices have also robbed the market of some of its incentive to seek alternative energy sources. While greater government investment may help, oil remains the deciding factor in CAPS member CharlieBombay's belief that LDK Solar will underperform the market:
I guess the increases in government spending could give solar a boost. But, with $40 oil, I'm downing it. Risky trade.
A glittering opportunity
Owning 60% of the mining rights in the Lake Victoria region of Tanzania, and controlling more than half of the country's gold projects along with Barrick Gold (NYSE: ABX ) , Tanzanian Royalty Exploration possesses a rich vein to tap in the wake of the fiscal turmoil that's spread around the globe.
Earlier this year, CAPS member goofypicker correctly assumed that if decreases in consumer demand lowered the price of oil, precious metals like gold and silver would experience extreme volatility. In the longer term, however, goofypicker still thinks Tanzanian will benefit:
Gold and silver have taken a sudden drop during the past week. Many speculators are panicing and claiming that this is the end of the "commodity bubble". I don't think so. If you look at the fundamental reason behind the last 6 months rise in precious metals, you have to ask yourself....has anything changed? I don't think so. The Fed continues to pump liquidity into the market, the interest rate continues to decline, inflation continues to increase and the dollar continues to fall. That being said....if due to demand decreases oil drops sharply from here...there is a possibility that precious metals will follow. Precious metals will experience quite a bit of volatility and the gyrations may be tough to handle but I think due to the fundamentals that I mentioned above that a year from now precious metals will be much higher.
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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