You've probably heard of the "January Effect," the phenomenon that seemingly causes stocks, particularly small caps, to surge in the first month of the year. In theory, investors and institutions sell securities in December for tax-harvesting reasons, then buy them back the following month, causing them to jump in price.
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 July.
Whatever the reason, investing based solely on the calendar is certainly not a Foolish strategy. Backtesting and data-mining can turn up nearly any causal relationship we want, if we search hard enough. Still, wouldn't it be great to know ahead of time which stocks performed best at what times?
In the investor-intelligence community Motley Fool CAPS, more than 110,000 investors have weighed in on more than 5,500 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. The following five companies seem to do best in July:
|
Stock
|
Market Cap
|
Avg. % Return-July
|
Avg. % Return-Rest of Year
|
CAPS Rating
|
Return (YTD)
|
|
Stoneridge (NYSE: SRI )
|
$414.70 million
|
13.73%
|
(0.02%)
|
****
|
109.08%
|
|
Momenta Pharmaceuticals (Nasdaq: MNTA )
|
$481.2 million
|
13.40%
|
2.28%
|
***
|
83.19%
|
|
Core Laboratories (NYSE: CLB )
|
$3.02 billion
|
36.04%
|
4.19%
|
*****
|
5.43%
|
|
Cardiome Pharma (Nasdaq: CRME )
|
$536.1 million
|
22.29%
|
0.59%
|
**
|
(5.72%)
|
|
Cascade Bancorp (Nasdaq: CACB )
|
$198.5 million
|
5.98%
|
(0.78%)
|
**
|
(48.28%)
|
Sources: America Online, Motley Fool CAPS. YTD = year to date.
What's driven the better July performance of Core Labs, a reservoir management provider for the oil and gas industry, even as much of the rest of its year tends to be weak? Are reservoir levels rising in the summer? Its five-star CAPS rating suggests investors are excited about its prospects. We would need to look closer for the reason behind its July boost. This isn't a list of stocks to buy or sell -- just a platform for further research.
Except for a few days here and there, it's been a downer of a year for the companies on this list, but if July really is their month to shine, lets see which of the companies might live up to that promise.
Taking it to heart
Cardiovascular drug developer Cardiome Pharma is caught up in a game of wait-and-see with the FDA, as CV Therapeutics (Nasdaq: CVTX ) and Discovery Labs (Nasdaq: DSCO ) have been. It's been waiting to get approval from the regulatory agency for its lead drug, intravenous vernakalant, a potential heart arrhythmia treatment. It's been waiting since January -- ostensibly because agency reviewers haven't had the time to complete their tasks -- and may end up waiting at least a month longer for word since the FDA just announced it was changing the way it announces approval or denials.
No longer will the FDA send out "approval," "approvable," and "non-approvable" letters indicating yes, maybe, or no, respectively, on a drug, it will now issue "complete response" letters telling companies exactly what they need to do. Only that won't begin until mid-August.
In April we learned why top-rated CAPS All-Star pops83 is bullish on the company:
I feel that this will be rapidly accepted as the gold standard treatment for ER patient dx'd with new onset Afib. ... When the oral version reaches market, which will open the patient population base exponentially, the sky could very well be the limit. So, I say a year or so on the I.V. form of this drug. Long term hold based on the oral version still being in phase 2. As to this being a one drug wonder company, what a wonderful drug it is. The returns from the I.V. form alone in MHO will generate revenues that should finance research into other drugs for many years to come, or they get bought out for a nice premium. Who knows?
A calming effect
Still, we haven't yet heard from you, and at Motley Fool CAPS, every investor's opinion counts. 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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