In this article, we’ll take a look at the 12 best seasonal stocks to buy right now. If you want to skip ahead to our overview of seasonal investing and some recent stock market news, take a look 5 Best Seasonal Stocks to Buy Right Now.
Seasonality and cyclicality are inevitable parts of climate, economy, and business operations. Just as summers and winters occur regularly every year, an economy goes through periods of economic growth and economic contraction. Similarly, businesses are often limited to selling their products in a few months, and this also impacts their supply chain.
The strongest example of seasonal revenue is Apple Inc. (NASDAQ:AAPL). Apple’s fiscal year ends in September, and this month is also the center of the company’s business cycle. Apple regularly upgrades its iPhone in September, and begins its first quarter in October. Naturally, iPhone sales are highest when the smartphone is launched, and Apple’s revenue is also highest during Q1. This cyclical nature also flows into Apple’s supply chain in the form of orders placed to make iPhones.
Ahead of Apple’s first fiscal quarter, orders placed at companies like Taiwan Semiconductor Manufacturing Co (NYSE:TSM) surged during the quarter ending in September and the first calendar quarter of a year since the US technology giant completed most of its earnings. They slow down during. Orders for its latest products. Looking at the firm’s latest revenue figures. Its revenue in the first quarter of fiscal year 2023 was $117 billion and during the subsequent quarters it fell to $94 billion, $81 billion and $89 billion respectively.
After taking this seasonality into account the next question to be asked is whether it affects stock performance. After all, if certain quarters see consistently high revenues, one can also imagine that the stock price increases more during these time periods. Well, data compiled by analytics platform Tradewell shows that October is the best month to buy Apple shares as they historically return an average of 5.35%. For a three-month period, the months between November and February have seen the stock deliver the highest returns, at 8.67%. Similarly, the three months between May and August are the worst months for stocks. Comparing these figures to the nature of Apple’s business shows that the business cycle appears to create short-term opportunities for profit taking in the stock market.
As we mentioned above, similar disturbances are present in the economy also. These come in the form of cyclicality, a data pattern that is similar to seasonality. The difference between seasonality and cyclicality is that seasonal patterns follow a set time period (such as the summer months or Apple’s quarterly revenues) whereas cyclical patterns are not time bound. This means that an economy can show extreme growth and extreme decline over any period of time, be it a month or a year – the only certainty is that these will be extreme fluctuations.
Coming back to the stock market, seasonality is one of the most favorite topics in academia, researchers constantly study any factor that can affect share price returns. One such research paper has come from the Ivy Business School of the University of Western Ontario. It analyzed value and growth stock performance of equities listed on the NYSE, NASDAQ, and AMEX (now NYSE American) stock exchanges to find that not only is seasonality present in the returns generated by both value and growth stocks, but that Also that they exhibit different seasonality. Pattern.
The researchers concluded:
The paper finds that both value and growth stocks show seasonal strength in January and the first half of the year, but the effect is stronger for value stocks. However, in the second half of the year, the opposite is true. Growth stocks show weaker performance than value stocks. Seasonality is also seen in price premiums, with the NASDAQ and NYSE showing peak seasonal strength in the June to July period and relative seasonal weakness in the remaining months of the year. On the other hand, AMEX stocks show seasonal strength in the first seven months of the year and seasonal weakness thereafter, with the AMEX price premium turning negative, which is in contrast to the NYSE and NASDAQ price premiums which are always positive. While the findings are, in general, consistent with the January seasonal strength of value stocks found by Loughran (1997), there is no evidence that NASDAQ stocks influence the outcomes. The findings, which are widespread across all markets examined, are consistent with the gamesmanship hypothesis and portfolio rebalancing by professional portfolio managers. However, they do not agree with the argument that it may be higher risk that drives the outperformance of value stocks. This is because while portfolio managers seem to aggressively rebalance into value stocks at the beginning of the year, they move out of growth stocks more aggressively in the second half of the year (which they would not do if growth stocks carry less risk than value stocks), thus negating the argument that value stocks carry more risk than growth stocks.
Today, we’ll look at some seasonal stocks and top picks like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA).
12 Best Seasonal Stocks to Buy Right Now
To compile our list of the best seasonal stocks, we ranked the constituent stocks of the Horizons Seasonal Rotation ETF by the number of hedge funds that bought their shares in the third quarter of 2023 and ranked the top seasonal stocks. Had chosen.
Best Seasonal Stocks to Buy Now
12. Linde PLC (NASDAQ:LIN)
Number of hedge fund investors in Q3 2023: 71
Linde plc (NASDAQ:LIN) is an industrial grade gas provider headquartered in Woking, United Kingdom. The company has been performing well on the financial front recently as it beat analyst EPS estimates in all four of its latest quarters. Linde plc (NASDAQ:LIN) saw its third-quarter US revenue grow 10% year over year, and the firm also shared that it had $4.5 billion of products in its backlog.
During this year’s September quarter, 71 of the 910 hedge funds in Insider Monkey’s database held stakes in Linde plc (NASDAQ:LIN). The largest stake was that of Alexander Mitchell’s Scopus Asset Management, which was worth $19.3 million.
Our list of the best seasonal stocks to buy includes Linde PLC (NASDAQ:LIN), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and has joined forces with NVIDIA Corporation (NASDAQ:NVDA).
11. Freeport-McMoRan Inc. (NYSE:FCX)
Number of hedge fund investors in Q3 2023: 73
Freeport-McMoRan Inc. (NYSE:FCX) is a copper mining company headquartered in Phoenix, Arizona. It was at the center of a drama in November 2023, when management recommended shareholders reject a bid for the firm’s shares that was below its market share price.
As of the end of the third quarter of 2023, 73 of the 910 hedge funds profiled by Insider Monkey had invested in the company. Freeport-McMoRan Inc. The biggest hedge fund investor is Ken Fisher’s Fisher Asset Management (NYSE:FCX) as it owns 54 million shares worth $2 billion.
10. Home Depot, Inc. (NYSE:HD)
Number of hedge fund investors in Q3 2023: 76
Home Depot, Inc. (NYSE:HD) is an American home improvement products retailer. The Home Depot, Inc. (NYSE:HD) co-founded by former US President Donald J. The company is embroiled in political controversy these days after the demand for boycott of its stores intensified following Trump’s support.
Insider Monkey took a look at 910 hedge fund portfolios for their third quarter 2023 investments and found that 76 were in The Home Depot, Inc. (NYSE:HD). Of these, Ken Fisher’s Fisher Asset Management was the largest shareholder with a stake of $2.6 billion.
9. General Electric Company (NYSE:GE)
Number of hedge fund investors in Q3 2023: 76
General Electric Company (NYSE:GE) is an industrial products provider known for its power generation products. More than three-quarters of its stock is owned by institutional investors, indicating that shares can remain stable over a long period of time or fall rapidly in the blink of an eye.
Insider Monkey’s survey of 910 hedge funds for Q3 2023 shareholdings showed that 76 had bought the firm’s shares. The largest shareholder of General Electric Company (NYSE:GE) in our database is Chris Hohn’s TCI Fund Management as it owns $4.6 billion worth of shares.
8. Tesla, Inc. (NASDAQ:TSLA)
Number of hedge fund investors in Q3 2023: 81
Tesla, Inc. (NASDAQ:TSLA) is the world’s largest electric vehicle retailer. Q4 2023 is shaping up to be an important month for the company, as it prepares for the much-awaited launch of its EV truck, the Cybertruck.
Through September 2023, 81 of the 910 hedge funds in Insider Monkey’s database held Tesla, Inc. (NASDAQ:TSLA). Katherine D. Wood’s ARK Investment Management was the largest investor through its $1 billion investment.
7. Broadcom Inc. (NASDAQ:AVGO)
Number of hedge fund investors in Q3 2023: 87
Broadcom Inc. (NASDAQ:AVGO) is a semiconductor company that designs and sells connectivity and related products. Not only has it beaten analyst EPS estimates in all four of its latest quarters, but analysts have also set an upside of nearly $1,009 based on an average share price target of $64.
For their investments in the third quarter of 2023, 87 of the 910 hedge funds tracked by Insider Monkey owned shares of the firm. Broadcom Inc. (NASDAQ:AVGO)’s largest stakeholder is Ken Fisher’s Fisher Asset Management as it owns 2 million shares worth $1.7 billion.
6. Union Pacific Corporation (NYSE:UNP)
Number of hedge fund investors in Q3 2023: 90
Union Pacific Corporation (NYSEUNP) is an American railroad company headquartered in Omaha, Nebraska. November 2023 turns out to be a critical month for the company as federal inspectors found hundreds of flaws at its rail yard in Nebraska.
During Q3 2023, 90 of the 910 hedge funds surveyed by Insider Monkey held a stake in Union Pacific Corporation (NYSE:UNP). Eric W. Mandelblatt’s Soroban Capital Partners was the largest of these investors with its $1.6 billion investment.
Amazon.com, Inc. (NASDAQ:AMZN), Union Pacific Corporation (NYSEUNP), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA) are some of the top seasonal stocks that hedge funds are buying.
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Disclosure: None. 12 Best Seasonal Stocks to Buy Right Now Originally published on Insider Monkey.