It’s a Great Time to Buy These Six Stocks  | BY KEITH KAPLAN
CEO, TRADESMITH |
Market history says we’re in the worst period for returns all year. The old saying “Sell in May and go away” perpetuates this. The story goes that British traders back in the 1800s would cash in every May, take the summer off, and “not come back till St. Leger’s Day,” a horse race in mid-September. It has some merit. The six months between May and October are a historically weak period. Our own dataset proves it: Since 1950, stocks have returned less than 2% on average in this time. 
Well, I don’t know about you, but I don’t plan on sitting around holding my stocks for six months. Here’s another, more modern saying for you: “There’s always a bull market somewhere.” That’s the way I like to think. You might think it’s hard to find a bull market during this historical summertime lull. And it would be if you weren’t part of TradeSmith. We have the tools necessary to single out stocks with the best forward returns during the next few months. Today, I’ll share them with you… and show how you can create a “Buy in May” portfolio that could actually outperform the market going forward. | Recommended Link | | | | A mysterious money manager who predicted the rise of Apple, Google, and Netflix has released a scathing video about America’s economic future. He exposes how Elon Musk’s government efficiency initiative is creating both explosive wealth opportunities and devastating career obsolescence. Click here for more details. |  | | The Seasonal Anomalies Imagine knowing the exact time to get in and out of the world’s most popular stocks. Not only that, but imagine knowing how statistically likely it is for these stocks to run during these times. Finally, imagine you can see this through many years of market data… covering COVID, wars, energy shocks, inflation, interest rates – all of it. Well, you don’t have to imagine it. With our Seasonality tool, you can spot something you won’t find most places. Rather than just identifying periods of seasonal strength or weakness in the whole stock market… With our tool, you can see it for individual companies. With it, we can find what are historically the top-performing stocks from now through the end of October. Docusign (DOCU), for example, has historically trounced the market even through the seasonally bearish period: 
DOCU has not one, not two, but three high-probability bullish windows over the summer. The first one kicks off this Friday, with a historical average return of 11.2%. Then by the time Labor Day rolls around, DOCU will have gained 27.3%, on average. We’ve also written before about how our seasonal data helps us pin down one of the most unpredictable stocks of the last 30 years… On average, Tesla (TSLA) has returned more than 36% from today’s date through October. It’s had a positive return over 71% of the time. Within that time frame, TSLA has had a seasonally strong period from May 19 through July 13, when it has risen 24.3%, on average: 
These quick pockets of seasonal strength are what we really want to see. What else can we buy now that’s set to make big gains… and when? Well, before you think this only works on Big Tech stocks, let me share that a lot of real estate investment trusts (REITs) are showing super bullish seasonality in the summertime. The Omega Healthcare Investors REIT (OHI), to name one example, has gone up 8.1%, on average, from May 7 to July 21: 
Plus, check out this chart of Costco Wholesale (COST)… COST is set to enter a strong seasonality period from June 24 through Sept. 7. Over the past 15 years, it’s risen just shy of 8%, on average, with gains 100% of the time: 
Here’s another idea on Philip Morris International (PM)… From June 29 to July 29, PM has returned 5.4%, on average, in the last 15 years. It’s had a positive return 93.3% of the time. PM also tends to trade higher in the first half of June, too: 
So we have a little Big Tech… and some strong retail and consumer staples stocks. Let’s round out this “summer slump” portfolio with a Steady Eddy name – UnitedHealth Group (UNH). Once again, we see some above-average returns. UNH is about to enter a period where it has gained 5.6%, on average, and where it’s seen a positive return 93.3% of the time: 
The average of all the returns I highlighted today is over 15% – well above the expected returns during this bearish period. So, we now have a group of stocks that are all set to perform well in the coming weeks – defying the “summer slump” trend. Here’s the best way to buy them… Pure Quant Does All the Hard Work The other day, Mike Burnick showed you how Pure Quant helps you build specific types of portfolios based on conditions you set. But it can also build a portfolio out of specific stocks you want to buy. All we have to do is enter the six tickers we want to buy into Pure Quant, and it works its magic. Now, we have a clear recommendation of how many shares of each company to buy, based on their unique volatility traits. We call this the Volatility Quotient, or VQ. As you can see, this methodology has us buying a lot less of TSLA than we are of PM, which should give us a more stable portfolio overall: 
Now, this is not the most optimal portfolio for a long-term investor. It’s not designed to be. My purpose today is to show you how TradeSmith’s tools help you quickly turn an investment idea into an actionable plan. You could buy all these stocks today and then keep an eye on their Seasonality patterns. Once a pattern is completed, you could sell the stock and wait for the next pattern to roll around. Alternatively, you could a buy call option on these stocks for even more upside juice. What if you built a list of stocks set to perform badly in the coming weeks… and then traded put options on them to profit as they fall? Or looked for stocks with flat trading patterns over the coming weeks… and then sold options on them to take advantage of the choppy trade action? The big point is, TradeSmith’s tools give you everything you need to turn any investment idea into reality. That’s the power of our software, and it’s why I love being part of this firm. I’ll continue sharing my favorite ways to use TradeSmith’s software every week here in TradeSmith Daily. So stay tuned! All the best, 
Keith Kaplan
CEO, TradeSmith P.S. I’ve been posting a lot these days on X, @KeithTradeSmith, to share all the intriguing stocks TradeSmith is turning up in this chaotic market – as well as my ideal strategy for navigating the volatility. I’d love for you to follow along and join the conversation. It’s completely free for you to access and always will be! Look forward to seeing you there. | 
No comments:
Post a Comment