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 and then buy them back the following month, resulting in a price jump.
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 April.
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?
On Motley Fool CAPS, more than 96,000 investors have weighed in on more than 5,500 stocks and awarded 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 April:
|
Stock |
Market Cap |
Avg. % Return, April |
Avg. % Return, Rest of Year |
CAPS Rating |
YTD Return |
|---|---|---|---|---|---|
|
Spartan Motors |
$269.0 million |
10.76% |
1.31% |
**** |
12.43% |
|
Deutsche Bank |
$57.9 billion |
7.33% |
1.40% |
* |
(9.50%) |
|
Wendy's |
$2.0 billion |
6.27% |
(0.34%) |
** |
(10.74%) |
|
AmeriCredit |
$1.2 billion |
21.94% |
1.49% |
* |
(18.30%) |
|
Zoran |
$656.6 million |
15.49% |
0.10% |
**** |
(35.85%) |
Sources: America Online, Motley Fool CAPS, as of April 10.
What's driven the stellar April performance of auto-finance company AmeriCredit while the rest of its year tends to be dismal? As much as car shoppers may start to have thoughts of a new ride as the weather turns warmer, AmeriCredit rival Consumer Portfolio Services
Except for a few days here and there, thanks to the Federal Reserve, the year has been off to an ugly start for many stocks, but if April really is their month to shine, lets see which of the companies above might live up to that promise.
An austere future?
As much as April tends to be Spartan Motors' big month for growth, the custom chassis manufacturer has already posted year-to-date returns in excess of its monthly average. With management suggesting that the immediate future for recreational vehicles could be tough, it seems Spartan just might be facing a rather Spartan future itself. Others, including Oshkosh Trucks
That has stopped investors from believing in the quality of the work Spartan does, particularly in the fire-truck market. CAPS player ct2twenty says the craftsmanship of its fire trucks is self-evident.
I have been driving a Spartan chassis fire engine for many years now. I do think it is important for people to understand that in the fire service, Spartan chassis are consistently thought of as high quality equipment. They are well built and have managed to incorporate the new diesel exhaust standards without compromising cab space. As a mechanic, they hold up extremely well to the rigors of emergency use. When we spec new apparatus, we immediately 'pen in' Spartan.
Yet the market for fire trucks is in a bind now, too, as the American LaFrance bankruptcy filing underscores. Municipal budgets, just like consumer pocketbooks, are feeling the constraints of a worsening economy.
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 may display. Since it's free to sign up and express your investing opinions, why not use this opportunity to take your star turn?
