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.

All through 2008, we've looked at stocks that also do better in 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 January, 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 in which months?

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 January:

Stock

Market Cap

Avg. % Return-Jan

Avg. % Return-Rest of Year

CAPS Rating (out of 5)

LTM Return

Terra Nitrogen (NYSE:TNH)

$2.0 billion

22.74%

5.15%

****

(11.24%)

Nucor (NYSE:NUE)

$14.1 billion

9.97%

1.98%

*****

(11.65%)

Life Technologies (NASDAQ:LIFE)

$4.1 billion

12.03%

0.81%

*****

(48.77%)

NII Holdings (NASDAQ:NIHD)

$4.0 billion

11.38%

0.63%

****

(50.90%)

Golden Star Resources (AMEX:GSS)

$283.1 million

9.20%

(2.63%)

*****

(65.12%)

Sources: America Online, Motley Fool CAPS.

What's made Life Technologies a better performer in January compared to the rest of the year? Rival Enzo Biochem (NYSE:ENZ) has a tendency to outperform in June, providing 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 behind Life Technologies' jolly Januaries, though its five-star CAPS rating suggests that investors think there's plenty of life left in its shares.

If these companies have really resolved to do better in January, let's take a look at some of those above that might live up to that promise.

Steely resolve
If President-elect Obama makes good on his pledge to inject hundreds of billions of dollars -- perhaps even $1 trillion -- into the economy through major infrastructure projects, you'll see steel makers like Nucor and AK Steel (NYSE:AKS) benefit from rising demand.

CAPS All-Star member novaphi believes Nucor will benefit from the inflationary pressures that arise from the government's current proposals for "pump-priming" spending initiatives:

I think American companies that rely on commodities will strengthen on the coming inflation. With the U.S. choosing dramatic fiscal policies to fight deflation there is an acknowledgment among many economists that this likely means an inflationary wave down the road. Furthermore, U.S. fiscal policy is likely to turn to printing dollars to pay for our ever expanding debt/government/government programs/bureaucracy for those programs etc. If Nucor can survive/thrive in a market where the market fundamentals of labor and cost of doing business don't favor them, imagine how they can succeed if those fundamentals shift in their favor.

Say "Hola!" to growth
Top-rated CAPS All-Star sailrmac wrote in early December that NII Holdings, the push-to-talk wireless-phone specialist in Latin America, will experience a rising P/E margin if its growth resumes at the end of 2009. The company, spun off from Nextel's former international division, should be a winner in a few years, even under a worst-case scenario. Here's sailrmac's take:

Expect subscriber growth to slow to 1/2 of normal due to global recession, say 15%. Expect Fx to stay where it is, becasue I haven't the faintest, which bakes in a 30% decline in $terms. This equates to a decline in earnings in dollar terms of say 15%. Let's built in an error factor and say 50% decline in earnings in dollar terms in 2009. That would make the today's P/E of 6 a P/E of 12 next year assuming the same price.

However, I expect the outlook in 2009 to be quite different. In 2009 people will be looking toward the recession ending and subscriber growth to go back to the 30% range (still nowhere near full penetration for these markets). At today's price, in 2009 you will be looking at a trailing P/E of 12 with an expected earnings growth rate of 30%. People pay more than a P/E of 12 for a stock they expect to grow 30% a year for a number of years.

This could quite easily be a double three years from now and the downside risk is reasonable. Good return potential average risk potential, I'll take it.

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?

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.