The February Forecast

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.

For more than a year, we've been looking at stocks that also do better in other months. Retailers, for example, perform better in some seasons than others, simply because of the nature of the business. And some stocks actually do best in February. 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 125,000 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 February:

Sources: America Online, Motley Fool CAPS.

What's made heavy equipment manufacturer Terex such a February heavyweight compared to the rest of the year? Since rival Caterpillar (NYSE:CAT) does best in November, you can see 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 behind these stocks' monthly surges, but Terex's five-star CAPS ratings suggests that investors think there's more to mine here than just a brief flurry of opportunity. If these companies have really resolved to do better in February, let's see which ones might have the best chance to fulfill that promise.

Not a good bet?
Maybe you remember Sam Antar. He was the founder of the Crazy Eddie electronics store chain, whose hyper-caffeinated announcer promised that their low prices would "drive you insane!" Well, Antar ended up serving time in jail for securities fraud. However, like fellow former convict Barry Minkow and his Fraud Discovery Institute, Antar has since begun using his knowledge of finances to help uncover fraud at other businesses.

Antar's blog White Collar Fraud has questioned how Overstock.com has been able to claim a profit. He asserts that if Overstock had restated its finances according to a particular rule within GAAP, it would have reported an $800,000 loss in the fourth quarter, instead of the $1 million profit it announced.

Top-rated CAPS All-Star member Polarimetric thinks online retailer Amazon.com (NASDAQ:AMZN) might be a safer investment. Polarimetric figures that if you've got a shaky foundation already, as Overstock does, investors don't need questions about its finances causing more tremors:

Over time, it is becoming more and more clear that Amazon is the only relevant retailer that doesn't sell items in brick-and-mortar environments. This is in part due to their partners with brick-and-mortar stores, and their prices. Not only is Overstock.com completely irrelevant, more and more so daily, but their business practices remind me of bread-and-butter dot-com practices. When you're not doing that fantastically in the first place, you really don't want accounting problems to embarrass you any further.

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?