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. Well, some stocks do better in April, although the reasons are not so clear.

Investing based solely on the calendar is certainly not a Foolish strategy, but nothing is stopping us from combining monthly information with the wisdom of our 130,000-member Motley Fool CAPS community to find places to start our stock research. CAPS members have weighed in on some 5,300 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 April:


Market Cap

Avg. % Return-April

Avg. % Return-Rest of Year

CAPS Rating (5 max)


$31.0 billion





Johnson & Johnson (NYSE:JNJ)

$220.0 million






$122.3 billion





Aflac (NYSE:AFL)

$146.1 billion





Citigroup (NYSE:C)

$13.8 billion





Sources: America Online, Motley Fool CAPS. LTM = last 12 months.

What's made oil giant BP such a gusher in April, while the rest of the year is pretty much a dry well? Take into account that competitor ExxonMobil (NYSE:XOM) does better in November, and you can see why investing based solely on the calendar isn't very Foolish. We'll dig a little deeper today, though, and see which candidates above might really rain results in April.

Building bridges
Like much of the market throughout the first quarter, duck-billed insurer Aflac has had a rocky start to the year. One analyst after another seems to believe that the insurance company's exposure to derivative instruments in Europe could impair its earnings in the months ahead. It owns about $8 billion in so-called hybrid securities, and analysts and the ratings agencies are concerned that if the banks are nationalized, Aflac's earnings and book value will bear the brunt.

After the first analyst waved the derivatives warning flag and said the financial instruments could substantially wreck the company's capital ratios if even a portion of the losses were realized, Aflac deftly deflected the issue by noting that 98% of the debt securities and perpetual debentures are investment-grade. They amount to only 12% of Aflac's total $69 billion investment portfolio, meaning the insurer is in no danger of collapse.

Yet that was followed by an announcement that Aflac lost its Wal-Mart (NYSE:WMT) account, the largest of its 427,000 payroll accounts, comprising some 2% of its annualized domestic premiums. Still, it seems the markets are making more of the matter than they deserve. Although the lost revenue is certainly a slap at the insurer, it shouldn't affect results all that much, since Aflac earns three-quarters of its revenue in Japan, making the Wal-Mart loss a mere 0.6% of total revenues.

When you start to accumulate a number of yellow flags, however, the market takes notice, and Aflac saw its stock plummet. Starting off the year at around $46 a share, today it trades for less than half that. It has shed more than $13 billion in market cap, or 60% of its value. Considering the amount of money that is possibly at risk and how the market has reacted, it certainly seems to be overdone.

With Aflac reiterating its guidance for the year, CAPS member rodvold thinks it's hard to bet against the duck:

This share used to trade at around 60$for two years before this recession. Their earnings and revenues for 2010 are higher than 2009, and 2009 is of course, better than 2008. Plus it's hard to get that annoying duck out of your head - this company is around to stay and I think is the most solid pick out of the DJ Insurance Top30.

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

Johnson & Johnson is a Motley Fool Income Investor pick. Wal-Mart Stores is a Motley Fool Inside Value recommendation. Aflac and are Motley Fool Stock Advisor selections. Try any of these 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.