You've heard of the "January Effect," when investors sell stocks in December for tax reasons only to buy them back in January, causing their price to jump.
All year long, we're looking at stocks that also do better in other months. Retailers, for example, perform better in some seasons simply because of the nature of the business. And some stocks actually do best in March. 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 130,000 members have weighed in on 5,300 stocks, awarding five-star ratings to the companies that command the most confidence. We've paired their opinions with data going as far back as five years to see which stocks perform best in each month. For March, it seems to be these five companies:
|
Stock |
Market Cap |
Avg. Return-March |
Avg. Return-Rest of Year |
LTM Return | |
|---|---|---|---|---|---|
|
American Vanguard (NYSE:AVD) |
$363.8 million |
12.62% |
0.67% |
**** |
(15.22%) |
|
Astec Industries (NASDAQ:ASTE) |
$512.8 million |
9.43% |
1.07% |
***** |
(23.83%) |
|
Lifeway Foods (NASDAQ:LWAY) |
$116.3 million |
17.83% |
0.66% |
** |
(26.84%) |
|
DXP Enterprises (NASDAQ:DXPE) |
$128.5 million |
25.35% |
4.16% |
**** |
(47.64%) |
|
Sun Hydraulics (NASDAQ:SNHY) |
$237.3 million |
29.35% |
1.73% |
***** |
(47.90%) |
Sources: America Online, Motley Fool CAPS. LTM = last 12 months.
What has made kefir maker Lifeway a delicious drink in March? Other consumer goods retailers like General Mills (NYSE:GIS) do better in September, underscoring why we don't recommend simply using this as a list of stocks to buy or sell -- it's just a platform for further research. We may need to look closer for a reason, but its two-star CAPS rating suggests investors think Lifeway's future will be dim. Yet if these companies really go nuts in March, let's take a look at some of them.
Building bridges
At one time, it seemed everyone was claiming that President Obama's spending programs would lift their businesses out of the doldrums. Today, not so much. The reality is that the trickle-down effect of the plans won't do much to boost results in the near term.
That might be why some executives are now saying that any growth achieved will have to come from within. Even some businesses that are best positioned to capitalize on the spending now minimize its impact. Road-building-equipment maker Astec Industries, for example, points out that infrastructure projects amount to less than 4% of the stimulus plan, so it's unlikely it'll help its results. The real spending stimulus for companies like Astec and Terex (NYSE:TEX), a competitor in the domestic, hot-mix asphalt business, is the federal highway bill that will soon be up for consideration.
That program could double the current $286 billion authorization and be dedicated only to infrastructure spending. Indeed, it is highway spending that drives investors to consider Astec. CAPS All-Star MystixX notes the spending bill in suggesting Astec will outperform the market, as does hwyman64, who says infrastructure spending will help consumers immediately.
Infrastructure will boom over the next few years as it's the easiest and most efficient way to keep people working. While governments invest billions in infrastructure just think of how much money is returned to those same governments in income tax, sales tax, fuel tax etc. etc. etc.
Infrastructure is an excellent way to spend money keeping people employed and get immediate return on the dollar that just went out the door.
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 it is. It's free to sign up and express your investing opinions, so why not take your star turn?
