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5 Gift-Wrapped Stocks

By Rich Duprey - Updated Apr 5, 2017 at 7:57PM

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These stocks are tops in the month of December.

You've heard of the "January Effect," where investors sell stocks in December for tax reasons, only to buy them back in January, causing their price to 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 actually do best in December, despite the window dressing going on. 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 120,000 members have weighed in on some 5,400 stocks, awarding five-star ratings to the companies that best 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 December:


Market Cap

Avg. % Return - Dec

Avg. % Return - Rest of Year

CAPS Rating (out of 5 max)

YTD Return

Duke Energy (NYSE:DUK)

$18.6 billion





Activision Blizzard (NASDAQ:ATVI)

$12.5 billion





The India Fund (NYSE:IFN)

$741 million





Blockbuster (NYSE:BBI)

$235 million





Fannie Mae (NYSE:FNM)

$695 million





Sources: America Online, Motley Fool CAPS.

What's made Blockbuster a better performer in December compared to the rest of the year? Considering that online rival Netflix (NASDAQ:NFLX) does better in September, it's one reason why we don't recommend simply using this as a list of stocks to buy or sell -- just a platform for further research. We need to look closer for the reason, but their three- and four-star CAPS ratings suggests that investors think there's something worth mining here. But if December really is their gift month for investors, let's see which of the companies above might live up to that promise.

The Duke of Alt Energy
The investment tax credits that were renewed by Congress a few months ago may help spur utilities like Duke Energy to increase their investments in alternative energy. While it has scaled back some of its more aggressive plans to place solar panels on North Carolina rooftops, the utility is moving ahead with building wind farms out in Nevada, and it's also ironed out an agreement with Wal-Mart Stores (NYSE:WMT) to electrify some of its stores with wind power. Looks like Duke Energy will have its hand in a quite a number of alternative energy opportunities.

CAPS member RfosterIII views the cyclical beating the utility has taken as an excellent opportunity to acquire a solid, dividend-paying winner:

All utilities take theri beating from time to time but Duke seems to hang in there doing what they do best. The company is on sale big time and now is the time to add this player to your portfolio. While you are at it enjoy the dividend and pick up all you can on dips.

Gaming hero
At least one analyst thinks that the demise of the Guitar Hero franchise is greatly exaggerated. While the World Tour version of the Activision hit may not have reached the levels hoped for yet, the franchise as a whole (think Guitar Hero Aerosmith) is still expected to rise 20% domestically. Moreover, there's a plethora of branding opportunities to come next year with plenty of bands and offshoots available to keep the brand alive.

CAPS member duoderm sees Activision's other franchises like World of Warcraft also gaming the system in its favor:

Activision-Blizzard holds some of the most popular game titles and series. World of warcraft is the worlds most popular MMROPG that charges a service fee monthly for each subscription. Call of Duty, Guitar Hero, upcoming Starcraft addition. No doubt the company will weather the economic storm as people try to "get away" with entertainment.

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

Duke Energy is a Motley Fool Income Investor pick. Wal-Mart is an Inside Value recommendation. Netflix and Activision Blizzard are Stock Advisor picks. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey owns shares of Wal-Mart but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Duke Energy Corporation Stock Quote
Duke Energy Corporation
$108.51 (-0.50%) $0.55
Activision Blizzard, Inc. Stock Quote
Activision Blizzard, Inc.
$80.51 (-0.49%) $0.40
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$129.82 (0.96%) $1.24
Netflix, Inc. Stock Quote
Netflix, Inc.
$242.70 (-0.58%) $-1.41
Federal National Mortgage Association Stock Quote
Federal National Mortgage Association
$0.66 (1.07%) $0.01
The India Fund, Inc. Stock Quote
The India Fund, Inc.
$17.98 (-0.66%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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