Extreme volatility looks to be with us for some time, and that makes finding stocks to buy especially challenging for the month ahead. And if that weren’t enough, tactical investors have another high hurdle to clear, as September is the worst month for market performance.
Since 1928, the S&P 500 has lost 0.7% on average in September. For whatever reason, seasonality is very much against equity investors this month to begin with. Skittish investors and tumbling markets could make this month even worse than usual.
Fortunately, a hunt for names with encouraging technical indicators and a track record of strong seasonality reveals some stocks to buy against this backdrop. If a stock can find support at key technical levels or even carve out the buy signal of a golden cross under current conditions, it’s a good bet to outperform in the weeks ahead.
After screening the market for stocks with strong technicals and fundamentals, we found a handful of names that look like they’ll hold up well during the worst month for stocks. Indeed, seasonality suggests that these stocks will put up solid gains this month.
From utilities to a restaurant chain, here are five stocks to buy for September.
Stocks to Buy: Atmos Energy (ATO)
Click to EnlargeIt’s hard to like energy stocks when oil prices refuse to put together any kind of sustained rebound, but that doesn’t mean some names aren’t poised for at least short-term gains.
Gas utility Atmos Energy (ATO) looks to be such a stock. Shares in the gas utility don’t have a track record of gangbusters seasonality in September, but they do beat the market.
On average, ATO stocks puts up a break-even September, according to 10-year data from Thomson Reuters Stock Reports. October and November are better, with gains of 1.3% and 0.6%.
The technicals are promising, as well. ATO is actually in the process of making a golden cross. That’s a buy signal for chart watchers.
Stocks to Buy: Buffalo Wild Wings (BWLD)
After all, investors can’t pull out of the market entirely, so they need to find names that can work in today’s market environment.
BWLD fits the bill. Shares made a golden cross near the end of August, and that move has helped BWLD maintain buoyancy amid the wider market sell off. Indeed, BWLD is still up a solid 5.5% for the year-to-date.
Furthermore, investors like this name at this time of year. Over the last decade, BWLD has an average September gain of 4.9%, followed by upside of 2.5% in October and 0.7% in November.
Stocks to Buy: Consolidated Edison (ED)
Click to EnlargeSlumping energy prices and an imminent Federal Reserve rate hike brought utilities back to Earth after a torrid 2014, but that doesn’t mean the sector is bereft of tactical plays. Consolidated Edison (ED), for one, is set for short-term upside.
ConEd stock was breaking out before the market tide turned, and the technicals and seasonality suggest it can outperform in the month ahead. The market likes this name in September and October, giving it average long-term gains of 0.9% and 2.3%, respectively, over the past decade.
Perhaps more importantly, ConEd is on the cusp of forming a golden cross. True, shares just broke through their 50-day moving average, so the stock needs to bounce back quickly in order to regain upside momentum. But if ED stock manages the feat, there could be substantial upside from here.
Stocks to Buy: Intuitive Surgical (ISRG)
Click to EnlargeIntuitive Surgical (ISRG) has had its ups and downs so far this year, but the long-term trend remains positive. That trend should help shares in the robotic surgery company enjoy a traditional fall performance.
ISRG carved out a golden cross right about when the market started having fits, and that move will allow it to outperform in September. Were it not for the general selloff, ISRG looks like it would have found support at its 50- and 200-day moving averages and continued to climb.
On average, the stock logs a gain of 2.5% in September, 4.9% in October and 2.3% in November. Those might be lofty goals this time around, but you can bet ISRG will hold up better than the S&P 500 this fall. Indeed, it is inversely correlated with the broader market.
Stocks to Buy: Piedmont Natural Gas (PNY)
Click to EnlargeLike ATO, Piedmont Natural Gas (PNY) is a gas utility with favorable technicals and seasonality at a time when the market is looking for bargains in the sector. Those factors should help it beat the market in September.
After all, sentiment is sweet on this name this time of year. PNY enjoyed average gains of 0.2% in September — the market’s worst month — as well as 3.3% and 0.3% in October and November, respectively.
On a technical basis, PNY is on the cusp of a golden cross. Even better, the stock found support at its 200-day moving average in Monday’s market plunge. When this volatile month comes to an end, PNY has an excellent chance of coming out on top.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.