November marks the home stretch for 2014 stock market performance, so any investors still looking for stocks to buy had better pull the trigger now. Yes, the S&P 500 has put up a more-than-respectable gain of almost 9% for the year so far, but that doesn’t mean tactical investors can’t beat those returns with the right stocks to buy in November.
Indeed, when it comes to historical market performance, November’s not so hard to outperform. After all, it sits only in the middle of pack in the monthly performance race. Since 1928, the broader market gained an average of just 0.6% in November, according to Yardeni Research. Indeed, six months offer better returns than November. (March is a tie.)
If seasonality holds, stocks to buy with superior technicals have an excellent chance of outperforming the broader market this month, and that’s exactly what tactical investor aim to do.
Interestingly, a variety of sectors display seasonal strength heading into the end of the year, but one thing they have in common is that they all stand to benefit from the surge in consumer spending ahead of the holidays.
After scouring the S&P 500 for stocks with strong technicals and outstanding seasonality, we found that these five names are the best stocks to buy for November.
Stocks to Buy — Delta Air Lines (DAL)
Airlines see a huge uptick in business in the last two months of the year thanks to the holidays, but as any chart-watcher can tell you, that doesn’t necessarily translate into gains. Fortunately for anyone holding Delta Air Lines (DAL), it has a long history of November outperformance.
Seasonal strength abounds in DAL, with an average monthly gain over the last 10 years of 3.6%, according to Thomson Reuters Stock Reports. December and January have terrific track records too, rising 8.2% and 5.1% respectively.
Certainly the technicals support further upside in DAL. Look at the chart and you’ll see that after a short, sharp period of consolidation, DAL stock broke out to new 52-week highs. That move has it sitting well above its moving averages, giving shares price momentum to the upside.
Stocks to Buy — Visa (V)
Payments processors do brisk business this time of year, as holiday spending fills their coffers. As the biggest payments processor, Visa (V) stands to benefit more than most companies.
The market was thrilled with Visa’s quarterly earnings, but what really got investors salivating was Visa’s announcement of a new $5 billion share buyback program. As for seasonality, V gains an average of 3% in November and 4.2% in December.
On a technical basis, Visa’s chart is exciting for a couple of reasons. After consolidating last month, V recently broke out to a new 52-week high. Furthermore, after dithering around with each other for almost six months, the 50-day moving average is poised to cross the 200-day moving average from below. That’s a buy signal.
Stocks to Buy — Keurig Green Mountain Coffee Roasters (GMCR)
Steaming hot coffee stock Keurig Green Mountain Coffee Roasters (CMGR) might get a lift from holiday sales, but it sure doesn’t need it.
A partnership with Coca-Cola (KO) was already boosting bullish sentiment on this stock. GMCR really got shares boiling with its announcement that it struck a deal with holdout Kraft Foods Group (KRFT) to use Keurig’s brands. GMCR sits well above its 50-day and 200-day moving averages. In other evidence of upside price momentum, GMCR has been consistently marking new 52-week highs for a couple of months.
Seasonality is outstanding for this name, gaining an average of 9.1% in November over the last 10 years. Historically, GMCR builds on those gains with a 6.4% gain in December and 5.3% in January.
Stocks to Buy — Nike (NKE)
It’s no surprise that Nike (NKE) sells more athletic footwear and apparel ahead of the all-important holiday selling season. Yet NKE stock still doesn’t reflect that boom this late in the year, making a perfect stock to buy now.
NKE sits well above both its 50-day and 200-day moving averages, indicating more upside to come. Note that the 50-day crossed above the 200-day over the summer and that buy signal has been intact ever since. For the defensive minded, NKE has easily found support at its 200-day moving average. Indeed it hasn’t broken through the long-term trend indicator all year.
Seasonality is about what you would expect for a footwear and apparel company. Good gains in November and December — 3.5% and 1.5% — are followed by a selloff in January.
Stocks to Buy — United Parcel Service (UPS)
The holidays are the busiest time of the year for package-delivery companies and the market tends to reward them handsomely. Indeed, United Parcel Service (UPS) gains an average of 5.1% in November, beating the broader market by more than 4.5 percentage points.
UPS has struggled somewhat throughout the recovery because the global economy is growing in fits and starts, but on a technical basis it’s blasting off.
UPS carved out a death cross in September and did indeed sell off. However, it reclaimed that lost territory and now the 200-day moving average is about to cross the 50-day moving average from below. That should keep its 10-year streak of outperformance in November going. In more evidence of upside momentum, UPS is hitting new 52-week highs after springboarding off its 200-day moving average.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.