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 prices to jump.

All year long, 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. Some stocks actually do best in May.

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 of the year?

On Motley Fool CAPS, more than 130,000 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 May:


Market Cap

Average % Return, May

Average % Return, Rest of Year

CAPS Rating (out of 5)

LTM Return


$792 million






$710 million





American Oriental Bioengineering (NYSE:AOB)

$392 million





Olympic Steel (NASDAQ:ZEUS)

$223 million





Penn West Energy (NYSE:PWE)

$5.0 billion





Sources: America Online, Motley Fool CAPS.

Why does steel maker Olympic Steel have such an iron grip in May, while it gets pretty much cold-rolled the rest of the year? A similar business, Reliance Steel & Aluminum (NYSE:RS), does better in February, underscoring why we don't recommend simply using this as a list of stocks to buy or sell -- just a platform for further research. We may need to look closer for a reason, but Olympic's four-star CAPS rating suggests investors think there's no slag in its future performance. Let’s take a look at some of the other companies above that might flower in May.

Building bridges
It's difficult enough trying to separate the wheat from the chaff of U.S.-based and -listed companies, but the problems are compounded when you travel abroad to find a profitable investment.

The analysts at our international investment service, Motley Fool Global Gains, often cross the globe to meet with management and visit facilities in an effort to close the knowledge gap that can exist. Yet a country's cultural differences can still leave investors wary, even when business performance seems admirable.

For example, traditional Chinese medicine purveyor American Oriental Bioengineering seems to have a knack for riling up investors that rivals like Tongjitang Chinese Medicines (NYSE:TCM) have yet to master.

AOB is a serial acquirer, buying up businesses large and small. Last year, after announcing it planned to make one purchase, it quickly switched its target and bought another one instead. It issued a murky press release early this year to announce it was buying property in Beijing that could be used as a convention center, but then said later that the building would be used for administrative purposes. It hasn't been entirely clear on whether it will remain a purely domestic company, or expand internationally. But after announcing recently that it had filed an application with the FDA to start clinical trials for a urinary incontinence product in the U.S., it seems to have answered that question. Needless to say, improving corporate communications needs to be job one.

Of course, people are leery of investing in China as it is, and such miscues don't enhance confidence. But it's also possible to step into the breach and profit from the reticence of others. CAPS member swlawrence2 aims to profit from the communication gap:

Solid company with strong prospects for growth at a ridiculously cheap price. Don't let cultural miscommunication, which has scared away some Western investors, from allowing you to get in on what will probably be a multibagger. Great stock!

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?

American Oriental Bioengineering is both a Global Gains and a Hidden Gems pick, and the Fool owns some shares. To read why, try either newsletter free for 30 days.

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