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're looking at stocks that also do better in other months. For retailers, some seasons are better than others, simply because of the nature of the business. And some stocks actually do best in May. 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 their best at what times?
On Motley Fool CAPS, more than 130,000 members have weighed in on about 5,200 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 their best in each month. These five companies seem to do best in May:
|
Stock
|
Market Cap
|
Avg. % Return -- May
|
Avg. % Return -- Rest of Year
|
CAPS Rating (out of 5 max)
|
LTM Return
|
|
Force Protection (Nasdaq: FRPT )
|
$546.0 million
|
36.36%
|
2.11%
|
***
|
163.55%
|
|
Intel (Nasdaq: INTC )
|
$85.6 billion
|
4.62%
|
(1.11%)
|
****
|
(28.87%)
|
|
Dell (Nasdaq: DELL )
|
$22.0 billion
|
8.67%
|
(2.60%)
|
**
|
(39.61%)
|
|
ConocoPhillips (NYSE: COP )
|
$61.4 billion
|
4.01%
|
0.24%
|
*****
|
(50.28%)
|
|
Sonus Networks (Nasdaq: SONS )
|
$499.6 million
|
10.25%
|
(1.37%)
|
***
|
(54.36%)
|
Sources: America Online, Motley Fool CAPS; LTM = last 12 months.
What has made Sonus Networks, which provides infrastructure for Internet protocol communications, excel in May? Alcatel-Lucent (NYSE: ALU ) does better in March, underscoring why we don't recommend simply using this as a list of stocks to buy or sell. Consider it just a platform for further research. We may need to look closer for a reason, but Sonus Networks' three-star CAPS rating suggests investors think the restructuring program underway will be a positive step. Yet if these companies really do excel in May, let's take a look at one company that might live up to that promise.
Building bridges
Defense Secretary Robert Gates has shaken up defense contractors with his bid to realign how the military uses weapons, vehicles, and systems. Boeing (NYSE: BA ) , for example, would come out a big loser if Gates gets his way.
Navistar International would be another loser because the Pentagon's change of direction might affect its heavily armored mine-resistant ambush-protected trucks known as MRAPs. Navistar initially filed, then withdrew, a protest over the government's selection process, leading some to think the company might still be in the running ahead of other manufacturers like Force Protection. At $500 million to $3 billion, the deal would be a huge win for a company.
For Force Protection, the MRAP contract would be big, but the company has diversified its business to such an extent over the past few years that losing the deal would hurt less. For example, it won a $153 million order from the Marines for a system suspension kit.
With the diverse government contracts, CAPS member hook45 believes it has a steady stream of revenues.
good pick....government contracts that give this company guaranteed revenue for the next several years. They make people haulers that are resistive to [rocket-propelled grenades] and can also withstand land mines. They are replacing Humvees with the vehicle that [Force Protection] produces so I think this company will do well for the next several years.
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. It's free to sign up and express your investing opinions, so why not use this opportunity to take your star turn?
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