The first is last -- when we're talking about the calendar and the S&P 500. Since 2004, the major index has risen only half of the time during the first month of the year. That's a lower rate than any other month.
Granted, the average returns for the S&P 500 during June and September have been lower than those in January. Still, it's indisputable that January has been one of the worst months for the S&P 500 over the last 20 years.
Should investors stay on the sidelines? Nope. Here are three stocks to buy anyway.
1. Brookfield Renewable
One option for investors is to buy stocks that aren't in the S&P 500. While January hasn't been a great month for the index, that's not necessarily the case for stocks that aren't in it. I think that Brookfield Renewable (BEP +2.00%) (BEPC +0.00%) stands out as a great pick right now.
Sure, the lackluster performance of this renewable energy stock in 2023 might raise some questions. However, Brookfield Renewable has juicy distributions (the yield for its limited partnership units tops 5%) that boost total returns. More importantly, the company's growth prospects are outstanding.
NYSE: BEP
Key Data Points
Brookfield Renewable expects to deliver average annual total returns of between 12% and 15% over the long term. At that rate, you could double your money every five or six years. This target growth isn't just wishful thinking, either.
The demand for renewable energy will almost certainly increase significantly over the next decade. Brookfield Renewable is ramping up to help meet that demand. Its development pipeline capacity of 143.4 gigawatts is more than 4.5 times its current capacity of 31.5 gigawatts.
2. MercadoLibre
U.S. stocks, especially large-cap tech stocks in the S&P 500, outperformed most international stocks in 2023. However, MercadoLibre (MELI 1.08%) delivered exceptional returns. I think this high-flying international stock could keep its momentum going.
NASDAQ: MELI
Key Data Points
Some refer to MercadoLibre as the "Amazon of Latin America." That's an apt nickname. MercadoLibre ranks as the e-commerce and fintech leader in the region, with operations in 18 Latin American countries.
Business is booming down south. MercadoLibre's revenue in the third quarter of 2023 skyrocketed 69% year over year on a constant-currency basis. Gross merchandise volume soared 59%.
MercadoLibre continues to expand its logistics business throughout Latin America. The company has relaunched and improved its customer loyalty program. It's investing heavily in building a credit card business, especially in Brazil and Mexico. I expect that these initiatives will pay off in the coming quarters.
3. Vertex Pharmaceuticals
Arguably the best way for a stock in the S&P 500 to overcome the relatively negative history for January is to have good news during the month. And Vertex Pharmaceuticals (VRTX 2.34%) could have some great news in store.
The big biotech expects to announce results from three late-stage studies of its vanzacaftor triple-drug therapy targeting cystic fibrosis (CF) in early 2024. I predict that the vanzacaftor combo will knock the ball out of the park with the late-stage results and will go on to become Vertex's most profitable CF therapy yet.
NASDAQ: VRTX
Key Data Points
That's not the only potentially great news on the way soon, though. Vertex also plans to announce the results from three late-stage studies of VX-548 in treating acute pain early this year. After the company announced overwhelmingly positive phase 2 data for VX-548 in treating diabetic peripheral neuropathy last month, expectations are very high for the non-opioid drug.
Looking beyond January, Vertex could have even more positive developments in store. The U.S. Food and Drug Administration is scheduled to announce its approval decision on Casgevy in treating transfusion-dependent beta-thalassemia by March 30. The agency has already given a thumbs-up for the gene-editing therapy in treating sickle cell disease.
