You've probably heard of the "January Effect," the phenomenon that seems to cause 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, then buy them back the following month, causing them to jump in price.
Yet what about other months? Retailers, for example, perform better in particular months because what they sell is seasonal. Some stocks even do better in May.
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 when which stocks performed best?
On Motley Fool CAPS, more than 100,000 investors have weighed in on more than 5,600 stocks, awarding five-star ratings to the companies that most command 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 May:
|
Stock |
Market Cap |
Avg. % Return: May |
Avg. % Return: Rest of Year |
CAPS Rating |
YTD Return |
|---|---|---|---|---|---|
|
MasterCard |
$36.5 billion |
33.91% |
4.78% |
*** |
29.98% |
|
OmniVision Technologies |
$887.9 million |
19.17% |
0.31% |
**** |
8.96% |
|
NVIDIA |
$11.4 billion |
21.04% |
2.27% |
***** |
(39.60%) |
|
Micron |
$5.9 billion |
12.07% |
(1.15%) |
*** |
6.50% |
|
Jamba |
$132.1 million |
14.73% |
(10.80%) |
***** |
(32.20%) |
What's driven the stellar May performance of juice maker Jamba? Much of the rest of its year tends to go sour. While fellow beverage maker Hansen Natural
That's why we don't recommend using this information as a list of stocks to buy or sell -- it's a platform for further research. Whatever the reason, Jamba's five-star CAPS rating suggests that investors are drinking till their cups runneth over.
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, although most of those listed here have been doing well so far. But if May really is their month to shine, let's see which companies seem most likely to live up to that promise.
Game on!
High-end computer users and gamers have long held NVIDIA's graphics chips in high regard. The company's products have improved the quality and performance of games and other graphics-intensive applications on desktop and laptop computers, as well as handheld devices and mobile phones.
Analysts think NVIDIA will face new competitive pressures from the other big-name chip makers this year. They've already cut their opinion of the Motley Fool Stock Advisor recommendation because of a weak outlook on the economy and the potential for declining PC sales, which might compress margins.
Yet some investors say, "Bring it on!" Top-rated CAPS All-Star joekelly123, who sports a 96.89 player rating, notes that not only does NVIDIA have some of the best products on the market, but serious gamers are loyal to the company as well.
I'm a gamer and it is widely recognized that NVIDIA produces the best technology on the market, it is also fairly obvious that Gaming as an industry is growing at an astounding rate. For gamers it's almost a necessity to own the most powerful card affordable and claim the bragging rights to go with it, no point in having the newest games if you haven't the rig to run it. There is tons of cash to be made selling high spec (high cost) peripherals to these fanatical gamers who would quite literally sell their grandmother.
A calming effect
But we haven't yet heard from you or your grandmother, 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?
