Time is fast running out for tactical investors to find stocks to buy to beat the market in 2015, and if December follows its usual seasonal trend, the bar for outperformance is only going to get higher.
Sure, maybe it’s just fund managers reaching for window dressing, but December has historically been a great month for stocks. Indeed, over the long term, the S&P 500 has delivered an average price gain of 1.4%, according to Yardeni Research. That’s second only to July’s typical price return of 1.5%.
It still wouldn’t be enough to make up for what has been a pretty ho-hum year for equities, though. Any tactical investor only tracking — or even lagging — the broader market is sitting on some very disappointing returns. Heading into Monday’s open, the S&P 500 was up just 1.6% for the year.
Against that backdrop, traders and tactical investors need to key on stocks to buy that boast short-term technical strength and market-beating seasonality. (And hey — fundamental tailwinds and positive news flow sure don’t hurt either.) Stocks throwing off buy signals will attract buyers, and upside momentum tends to fuel further gains too — especially in December when investors are buying hot stocks to shore up returns before they close the books on the year.
With all that in mind, we searched the S&P 500 for stocks that have a history of market-beating seasonality and a here-and-now of buy signals.
These are the five best stocks to buy for December.
Stocks to Buy for December: Aflac Incorporated (AFL)
On a technical basis, traders might have taken profits at the end of last week, but the momentum remains to the upside.
AFL shares recently hit a 52-week high, and the stock just carved out the buy signal of a golden cross. Aflac didn’t even have to test its 50-day moving average before the buyers stepped in.
As for seasonality, market participants traditionally favor this name at year end. Over the last decade, AFL has gained an average of 2.4% in December, according to data from Thomson Reuters Stock Reports.
Stocks to Buy Co: Bristol-Meyers Squibb Co (BMY)
Click to Enlarge Bristol-Meyers Squibb (BMY) is a great candidate to benefit from window dressing. The stock is up more than 17% for the year-to-date, and it’s within striking distance of a 52-week high.
Also helping price momentum in BMY is that it’s on the cusp of making a golden cross. It’s also trading comfortably above its 50-day moving average.
A big investment in research and development helped fuel this year’s gain in BMY stock — notably the continued success of cancer drug Opdivo.
Lastly, if history is any guide, you’ve got to like BMY as we head into year-end. Shares have gained an average of 4% in December over the pat 10 years.
Stocks to Buy: Delphi Automotive PLC (DLPH)
Click to Enlarge It’s no secret that vehicle sales are booming, but there are a number of other tailwinds favoring auto suppliers such as Delphi Automotive (DLPH). Car sales might be cyclical, but the trends of increased safety, environmental friendliness and connectivity are a secular tailwind.
Those positive fundamentals have helped DLPH rise more than 20% this year — with more upside ahead.
Upside momentum is supported by a recent golden cross that has put the stock close to notching a new 52-week high. The impressive YTD performance and technical strength should help Delphi Automotive benefit from window dressing in December.
The market has been a big fan in the past. DLPH sports a whopping average long-term price gain of 4.6% in December.
Stocks to Buy: General Motors Company (GM)
Click to Enlarge General Motors (GM) has enjoyed strong seasonality throughout the bull market, putting up an average price gain of 4.9% in December. Add strong fundamentals and upside momentum, and GM is a stock to buy for this month and beyond.
The U.S. vehicle market is cruising along, but General Motors also boasts strength overseas. Heck, GM is tallying record sales and solid profits in China, which has been a weak spot for many internationals.
It also helps greatly that General Motors’ costs for faulty ignition switches is in the rear-view mirror.
GM stock made a successful test of its 200-day moving average about a month ago and has maintained price momentum ever since. Last week’s golden cross should fuel yet more gains.
Stocks to Buy: JPMorgan Chase (JPM)
Click to Enlarge For the first time in a long time, it’s good to be a bank stock. The long-awaited Federal Reserve rate hike will at long last give banks like JPMorgan Chase (JPM) some relief from minuscule margins.
The rate hike should make for a good December for JPM all by itself, but if that’s not enough, investors can count on technicals and seasonality.
As for momentum, shares are up a market-beating 6.5% over the past three months and are in the midst of making a golden cross.
Also making the case for short-term out performance is a track record of stupendous seasonality. Over the last decade, JPM has delivered an average price gain of 5.8% in the final month of the year.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.