Contrary to popular belief, August is not a bad month for the stock market — which means it’s OK to keep looking for stocks to buy with any dry powder you might have. Trading volume might be sleepy thanks to vacationing market participants, but that hasn’t prevented stocks from posting gains in the past.
Indeed, since 1928, the S&P 500 has gained an average of 0.7% in August, according to Yardeni Research. Hardly heady returns — August stands as only the sixth-best month for market performance — but it does mean you should be able to find stocks to buy for short-term outperformance.
However, finding stocks to buy for August also means keeping an eye on September — by far the worst month for market performance. During the past 86 years, the S&P 500 has lost an average of 1% in September. That means you’ll want to target equities with the technical strength to maintain price momentum through next month’s expected broader weakness.
Technical analysis comes in handy when looking for stocks to buy. Strong technicals and superior seasonality tilt the odds in your favor for fining winners.
We screened the S&P 500 for stocks showing everything from price momentum to positive historical returns to find stocks with compelling technicals. Based on these strengths, here are five stocks to buy for August: