You've heard of the "January Effect:" Investors sell stocks in December for tax reasons only to buy them back in January, causing their price to jump. 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 125,000 members have weighed in on nearly 5,400 stocks, awarding five-star ratings to the companies that most 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. These five companies seem to do best in January:
|
Stock |
Market Cap |
Avg. % Return-January |
Avg. % Return-Rest of Year |
YTD Return |
|
|---|---|---|---|---|---|
|
EZCORP |
$639.9 million |
18.71% |
3.39% |
**** |
31.18% |
|
Halliburton |
$14.9 billion |
6.39% |
0.91% |
**** |
(55.39%) |
|
inVentiv Health |
$352.9 million |
9.27% |
0.74% |
***** |
(65.73%) |
|
Evergreen Solar |
$460 million |
14.51% |
1.35% |
*** |
(83.84%) |
|
General Motors |
$2.0 billion |
5.71% |
(3.18%) |
* |
(86.65%) |
Sources: America Online, Motley Fool CAPS. Average returns are for the previous five years.
What made Evergreen Solar a better performer in January compared with the rest of the year? Considering rival First Solar
Out of gas
Even with the government agreeing to extend loans to both General Motors and Chrysler, they have a short time to squeeze concessions out of the unions and creditors so that they can prepare a plan of profitability. Credit ratings agencies aren't so sure they'll be able to do enough, and the government hasn't shown a willingness to offer open-ended financing. Even Ford
Top-rated CAPS All-Star jmt587 doesn't hold out much hope for GM, either. But this investor likes its cars.
I think GM makes pretty good cars. But their business model and cost structure is outdated and unsustainable, and will force them into bankruptcy so they can reorganize and become a stronger company in the future. I don't think they can turn things around without bankruptcy. Management and the politicians will find the necessary steps too unpalatable until they have no choice (i.e. forced by a bankruptcy judge).
A pawn and a king
For pawnshop operator EZCORP, the recession has been a golden opportunity to grow. With traditional lines of credit still hard to come by for consumers, EZCORP's chains of pawnshops and cash advance centers have become a source of convenient credit and merchandise. It reported that third-quarter revenues grew by 19% over the previous year while profits rose 44% as it avoids the dangers the similarly situated payday industry is succumbing to.
CAPS All-Star ponyfan81 finds EZCORP to be in the right business at the right time, but still thinks pawnshops have a certain reputation.
Great recession stock - some legal worries long term due to questionable business line.
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?
On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.
