The March Mayhem Effect

You've probably heard of the January Effect, a phenomenon that seems to cause stocks, particularly small caps, to surge in January. The theory is it happens because investors and institutions sell securities in December for tax-harvesting reasons, then buy them back the following month, so the prices jump.

And the other months? Retailers, for example, perform better in particular months because what they sell is seasonal. Some stocks even do better in February.

Investing based solely on the calendar is not a Foolish strategy. Back-testing 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 when?

On Motley Fool CAPS, more than 86,000 investors have assessed more than 5,300 stocks, awarding five-star ratings (the highest) 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 companies seem to do best in March:

What drove the stellar March performance of uranium miner Uranium Resources? The surge is most likely an anomaly, just like January's status as the worst month to own the stock; Uranium Resources falls an average of more than 35% during that month -- so get ready to sell. Not!

It happens that May is the best-performing month for rival Cameco (NYSE: CCJ); it returns about 11% in that month.

You can see why we don't recommend using this as a list of stocks to buy or sell -- just a platform for further research. Whatever the reason, Uranium Resources' three-star rating suggests that CAPS investors have a middle-of-the-road opinion about its future performance.

Except for the past few days, thanks to the Fed, the year has been off to an ugly start for many stocks. If March really is their month to shine, let's see which of the five companies would live up to that promise.

It's all Greek to me
The big winner over the past year has been the development stage molybdenum miner General Moly. Named for the Greek word meaning lead, molybdenum was often confused for that metal. With its high melting point, it is frequently used in stainless steel alloys and alloy steel used to make, for instance, auto parts. The metal has many uses, including filament support in incandescent light bulbs.

General Moly's primary asset is its Mt. Hope molybdenum mine in Nevada, and although it has been able to ink a deal to provide the element to companies such as ArcelorMittal (NYSE: MT), it has not yet engaged in production and so has no revenue.

There is potential in its mines, but the stock's meteoric rise has been fueled on hope. If that hope turns to hype, General Moly could fall like, well, a molybdenum balloon. However, with the Mt. Hope mine estimated to be one of the world's largest molybdenum deposits, the company would seem highly likely to succeed.

It's that prospect, that likelihood, of the Mt. Hope project being a winner that has CAPS investor saschlos thinking the General will outperform.

GMO announced on Nov 23, that they have aggrement with ArcelorMittal S.A., the world's largest steel producer. ArcelorMittal has invested $70 million into General Moly for the Mt Hope Project, which is estimated to be one of the world's largest molybdenum deposits. Moly is a key ingredient to steel.

A calming effect
But 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 displays. It's free to sign up and express your investing opinions, so use this opportunity to take your star turn.