The S&P 500 got off to a rough start this year, but finally, things have begun to turn around. Sure, the benchmark index is still down 2% for the year-to-date, but the momentum is to the upside. Indeed, the broader market has gained almost 10% since hitting a 52-week low last month.
Still, that weak start to the year left plenty of market participants playing catch-up — and they’ll be thankful that March is here.
March typically is a good month for stocks. The S&P 500 has produced a 0.6% gain, on average, since 1928, according to Yardeni Research.
Against that backdrop, tactical investors and traders should search for stocks to buy that have both seasonal strength, and that are exhibiting technical buy signals right now. That’s the ticket to finding names that could outperform the market this month.
So, we screened the S&P 500 for stocks with technical strength and strong seasonality. That produced a fairly short list of stocks to buy. In every case, the stocks with the best short-term prospects have very recently described golden crosses — a buy signal that can become a self-fulfilling prophecy. A history of seasonal strength likewise bolsters the bull case for short-term upside.
So, because they stood out from the rest, these are your five stocks to buy for March:
Stocks to Buy: Baxter International Inc (BAX)
Click to EnlargeBaxter International Inc (BAX) stock may finally be breaking out of its range-bound ways. Shares in the medical supplies company have been trading between $32 and $42 for almost three years.
Hopefully, positive technicals and seasonality will do the trick. BAX failed to find support at its 50-day moving average test early February. Soon after, it broke through that key level in convincing fashion and recently made the buy signal of a golden cross.
Baxter also has seasonality on its side. The stock has gained an average of 2.4% this month over the last decade, according to Thomson Reuters Stock Reports.
Stocks to Buy: Church & Dwight Co., Inc. (CHD)
Click to Enlarge A strong fourth quarter brought a shine to Church & Dwight Co., Inc. (CHD) stock. The maker of everything from Arm & Hammer baking soda to Trojan condoms blasted off a couple of month’s ago and is now up 8% for the year-to-date.
CHD might be looking a bit pricey, but that doesn’t mean it can’t have more short-term pop. It just set a 52-week high, which suggests higher highs ahead. CHD also carved out a golden cross.
Additionally, this is a popular name in early spring. Over the last 10 years, CHD put up an average gain of 3.3% in March and 0.9% in April.
Stocks to Buy: Colgate-Palmolive Company (CL)
Click to EnlargeLike its consumer staples competitor CHD, Colgate-Palmolive Company (CL) stock typically does well in spring. The stock gains on average 1.9% in March, 0.1% in April and 0.7% in May.
Colgate beat Wall Street’s quarterly profit estimate, but sales fell short. However, that was driven by the strong dollar and weakness in Latin America. CL’s dependence on overseas revenue is a handicap these days, but organic sales growth actually held up rather well.
Slightly better sentiment on CL has shares finding support at its 50 DMA. They’re also making higher highs and higher lows. A recent golden cross is another strongly bullish technical signal.
Stocks to Buy: FLIR Systems, Inc. (FLIR)
Click to Enlarge FLIR Systems, Inc. (FLIR) stock is another name with a track record of seasonal strength at this time of year. FLIR boasts an average gain of 2.9% in March over the past decade. It follows that up with increases of 0.3% and 1.6% in April and May, respectively.
FLIR Systems keeps missing Street earnings estimates, but strength in the security segment and detection division have kept investors interested.
Hey, it’s hard to ignore defense contractor stocks when ISIS is in the headlines.
FLIR is making 52-week highs after describing a golden cross in mid-February. Additionally, shares have been making higher highs and higher lows for three months.
Stocks to Buy: Honeywell International Inc. (HON)
Click to EnlargeHoneywell International Inc. (HON) couldn’t convince United Technologies (UTX) to agree to a merger, and the market was just fine with that.
Shares first took off in mid-January and have maintained momentum ever since. HON stock keeps finding support at its 50-day moving average, and it made a golden cross last month.
And after UTX shot down HON’s proposal, shares springboarded off the 50-day MA to hit new 52-week highs.
The defense contractor also should benefit from a couple months of favorable seasonality. The stock has added an average of 3% in March and 3.2% in April over the last 10 years.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.