It sure wasn’t hard to find good stocks to buy in February. After a weak start to the year, the S&P 500 came roaring back, gaining 5% last month. Too bad tactical investors can’t afford to take some time off and bask in the glow of their returns.
Ordinarily, March is a pretty good month for market performance. Since 1928, the S&P 500 gained an average of 0.6% in the month. Of course, that’s only an average, not a guarantee. February is historically a poor month for stocks and look what they did this year.
That said, when looking for stocks to buy in such a market environment, it pays for tactical investors to pay attention to the technicals and seasonality of potential outperformers. As hot as the market has been, the best stocks to buy may need to be in a strong technical uptrend, close to taking out 52-week highs.
Yes, it’s better to buy low, but one thing technicals have shown us is that when a stock makes a new high, it tends continue to hit new highs. Whether it’s a self-fulfilling prophecy or not, when it comes to stock performance in the short term, momentum matters.
After scouring the S&P 500 for stocks with promising technicals entering a period of strong seasonality, we came up with these five stock to buy for March:
5 Stocks to Buy: Apple Inc. (AAPL)
Click to Enlarge Sure, Apple Inc. (NASDAQ:AAPL) makes any list of stocks to buy for a number of reasons. The iPhone 6 and iPhone 6 Plus are bona fide hits. The imminent launch of the Apple Watch is another catalyst for shares. And the valuation looks compelling.
Happily, in the short term, the technicals are on AAPL’s side too. Apple stock is closing in on a new 52-week high and it sits well above its moving averages. That kind of momentum argues for more upside ahead.
As for seasonality, AAPL is entering a three-month sweet spot. Over the last 10 years, AAPL gains an average of 5.3% in March, 6.5% in April and 3.6% in May, according to data from Thomson Reuters Stock Reports.
5 Stocks to Buy: Accenture Plc (ACN)
Click to Enlarge Accenture Plc (NYSE:ACN) doesn’t look like it will offer the same outsized returns as AAPL in March, but it does look more than able to beat the market for a couple of months. Between technicals and seasonality, ACN is headed for more solid gains.
For one thing, ACN is on the cusp of a new 52-week high. That portends more highs to come as investors — tactical and otherwise — take advantage of momentum. Seasonally, ACN is in a two-month period of historical outperformance, gaining an average of 0.7% in March and 2% in April over the last decade.
Lastly, the chart on ACN is very favorable. The stock made a golden cross — a buy signal — in December and it looks to remain in force.
Indeed, with a brief exception, ACN finds reliable support at its 50-day moving average.
5 Stocks to Buy: Amazon.com, Inc. (AMZN)
Click to Enlarge Amazon.com, Inc. (NASDAQ:AMZN) gets a lot of grief for climbing costs with seemingly no end and thin-to-no profits. But that doesn’t mean the market isn’t in love with this name again.
AMZN is less than 2% below its 52-week high, and that should provide a springboard to further gains ahead. Furthermore, after struggling to top and maintain a level above its 50-day moving average for the better part of a year, AMZN blasted through resistance at its 50-day and 200-day moving averages at the end of February.
A few sessions later, AMZN described a golden cross.
Like AAPL, AMZN is entering a period of historically fat returns. On average, AMZN gains 4.6% in March, 7.8% in April and 1.3% in June. Sure, AMZN can scuttle itself with another disappointing quarterly report, but that isn’t scheduled for release until late April.
Until then, momentum reigns.
5 Stocks to Buy: Best Buy Co Inc (BBY)
Indeed, BBY has seen this sort of action before. It seems like it’s always all or nothing with this name. With BBY honing in on a new 52-week high, it looks like March will be all.
Heck, BBY made a golden cross in late August and has been putting up impressive gains ever since. The 200-day moving average turned up not long after the golden cross — an indicator of a healthy stock.
The next couple of months have been good to BBY in the past. Even factoring in the months when the market marked it for death, BBY gained an average of 7.3% in March and 2% in April.
5 Stocks to Buy: Wells Fargo & Co (WFC)
Click to Enlarge The financial sector is set to gear up in spring, and that goes double for Wells Fargo & Co (NYSE:WFC), the nation’s biggest bank by market capitalization. True, WFC has been hamstrung by weak net interest margins and a less-than-robust housing market, but that won’t keep the stock from good things this month and beyond.
Over the last 10 years, WFC gained an average of 5.1% in March and 5.3% in April. WFC even adds an average of 1% in May, a month when the broader market typically logs a loss.
WFC is in a strong long-term uptrend, judging by its 200-day moving average, and that helps pull it out of the occasional dive when it violates its 50-day moving average. Mostly, though, that level offers support for WFC stock.
Furthermore, WFC is less than $2 away from a new 52-week high, and that will draw in momentum traders.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.