June is a pretty good month for market performance, but not so good as to make it too difficult to find stocks to buy for outperformance. That’s good news for tactical investors who are looking for a short-term edge.
And this year, finding outperformers is more important than it has been in at least a couple of years.
See, the broader market isn’t exactly on fire this year, poking along as it is with a gain of less than 3%. Indeed, the market looked pretty good there in the middle of May, but after running out of gas, the S&P 500 is back to where it was in late February and early March.
Happily, the S&P 500 offers plenty of stocks to buy for strong short-term performance. Identifying stocks with outstanding technicals — especially those in the midst of a so-called “golden cross” — as well as a track record of good seasonal gains gives the tactical investor a good shot at having a profitable June.
After screening the S&P 500 for both cases of technical strength and favorable seasonality (or at least not an ugly track record for monthly performance), a number of names stuck out as great candidates for stocks to buy now.
From a biotech to a cable company, here are five stocks to buy to kick off the summer trading season:
Stocks to Buy for June: Gilead Sciences (GILD)
Click to Enlarge Shares in Gilead Sciences (GILD) usually see a slow start to the summer before accelerating in the second half, but this year it looks like GILD will have a fine June as well.
Biotech and pharma stocks are rife with deals these days, and analysts don’t see GILD sitting on the sidelines for very long. Indeed, word is GILD will pick up assets in oncology and fiobrotic diseases soon in order to boost growth.
Shares just hit a golden cross, which is a strong buy signal. With some seasonality on its side, GILD is poised for additional upside now.
Stocks to Buy for June: Merck (MRK)
Click to Enlarge Merck (MRK) is fueled by some pretty serious upside price momentum heading into a seasonally strong period for the stock.
According to Thomson Reuters Stock Reports, over the last 10 years, MRK has gained 0.3% in June, 0.8% in July and 0.5% in the lazy trading days of August.
Heading into this summer, MRK doesn’t look like it will disappoint.
Shares are carving out a golden cross at the moment, and the fundamentals look good too. On the headline side of things, the Food and Drug Administration accepted MRK’s request for priority review of its new lung-cancer treatment.
Stocks to Buy for June: AT&T (T)
Click to Enlarge A big cable-company merger went down in flames on regulatory concerns this spring, and that heightened worries that AT&T’s (T) deal to buy DirectTV (DTV) could be in trouble too.
After all, investors have been waiting for this thing to close for more than a year!
AT&T investors can cast aside those fears, though. Credible reports have it that a green light for the acquisition is imminent.
On a seasonal basis, T tends to trade flat in June, but price momentum and the fundamentals should break the trend this year. After all, AT&T stock is on the cusp of a golden cross.
Stocks to Buy for June: GameStop (GME)
Click to Enlarge As far afield as it might be from ground zero for mergers and acquisitions (that would be pharma and biotech), GameStop (GME) has gotten into the act — much to the market’s delight.
The video-game retailer is working to diversify amid the growth of digital delivery for software. To that end, GME struck a deal to buy Geeknet (GKNT) for $140 million. GKNT owns ThinkGeek, which sells collectibles and other sci-fi and fantasy items.
GME stock has traditionally lost about 0.7% in June, but this year should buck the trend. Shares made a golden cross in late May, and the buy signal remains in force.
Stocks to Buy for June: Cablevision Systems (CVC)
Click to Enlarge Shares in Cablevision Systems (CVC) hit a golden cross in late May and have since taken off like a rocket.
With so much consolidation in the industry, the market figures it’s only a matter of time before CVC gets in on the act.
With 3.1 million subscribers in New York, New Jersey and Connecticut, CVC is the right size to fit with any number of partners. Besides, CEO James Dolan has said publicly he wants to see cable consolidation in New York City.
Historically, CVC has gained 3.8% in June and another 4.2% in July. Between strong seasonality and M&A fever, another hot summer for CVC stock is at hand.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
