The March Mayhem Effect

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You've heard of the "January Effect," when investors sell stocks in December for tax reasons only to buy them back in January, causing their price to jump.

All year long, we look at stocks that also do better in other months. Retailers, for example, stand out in some seasons simply because of the nature of the business. And some stocks actually do best in March. 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 130,000 members have weighed in on about 5,300 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 March:

Stock	Market Cap	Avg. % Return March	Avg. % Return Rest of Year	CAPS Rating (5 stars max.)	LTM Return
Ameristar Casinos (Nasdaq: ASCA)	$773.8 million	10.59%	(0.54%)	**	(36.76%)
Electro Rent (Nasdaq: ELRC)	$220.0 million	7.02%	(0.47%)	*	(39.83%)
Midas (NYSE: MDS)	$110.7 million	10.30%	(1.84%)	**	(52.20%)
Littelfuse (Nasdaq: LFUS)	$213.9 million	8.52%	(2.02%)	*****	(69.20%)
Hecla Mining (NYSE: HL)	$423.5 million	10.34%	(2.17%)	****	(81.33%)

Sources: America Online, Motley Fool CAPS; LTM = last 12 months.

What gives auto repair and maintenance specialist Midas a golden touch in March? Other auto repair shops like Monro Muffler Brake (Nasdaq: MNRO) do better in October, underscoring why we don't recommend simply using this as a list of stocks to buy or sell. Consider it a platform for further research. We may need to look closer for a reason, but Midas' two-star CAPS rating suggests investors think it's facing some bumpy roads. Let's take a look at one of the other companies above.

Building bridges
Even though silver and gold producer Hecla Mining has been doing well, analysts now believe that pricing for silver in particular will remain weak for the next few years, possibly hovering at around $11 an ounce, which would seriously hurt Hecla's ability to generate cash flow to help repay debt.

Particularly after Treasury Secretary Tim Geithner unveiled his plan to remove toxic assets from banks' balance sheets, the appeal of precious metals is waning. Gold prices recently fell to $928 and silver was down to just above $13 an ounce. The hope is that banks will start lending again after they rid themselves of their toxic assets. If that occurs, it would signal that the economy is improving, and the demand for gold and silver would dim.

But if the Treasury plan doesn't work and taxpayers wind up paying too much, those hopes might not be realized. (I hope this doesn't turn into something like the AIG (NYSE: AIG) fiasco.)

And bondholders who financed the bad debt might have to be made whole at the expense of taxpayers. Proponents argue that the toxic debt is merely mispriced by the markets and that taxpayers will profit when their true values are ultimately realized. The banks say these "legacy assets" are worth 80%, but the markets have deemed them to be worth only 20%.  And therein lies the case for precious metals to soar once again. If the plan doesn't work, people might scramble to the safety of these metals.

CAPS member DMarlen believes the inflation problem will surface shortly, and investors need to back the right miners to profit from it.

I am a firm believer that inflation is coming back. 70's type and worse. Silver and gold are places to be, and mining companies can magnify the gains. Of course, ya gotta pick the right miners, and I'm thinking [Hecla Mining] will be one of the right ones.

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. It's free to sign up and express your investing opinions, so why not use this opportunity to take your star turn?