April tends to be a very good month for the stock market. Although that’s welcome news for pretty much everyone, it does provide an extra challenge to tactical investors. If you hope to outperform the S&P 500 this month, you’re going to need some especially strong stocks to buy.
Over the long term, the benchmark index has an average price gain of 1.3%, according to Yardeni Research. Only July and December are better months for seasonality. So being a bit more aggressive at this time of year is a defensible way to go.
It’s near-impossible to predict what stocks are going to do in the short term. There are some tools that can help, however. Stocks with some key technical strengths are better bets than companies that are languishing or flashing sell signals. Strong seasonality — or a track record of market-beating average price performance — is another good sign.
After screening the S&P 500 for stocks to buy, we came up with a short list sporting strong seasonal buy signals. These five stocks look like solid candidates to deliver short-term outperformance.
April Stocks to Buy: Oracle Corporation (ORCL)
Click to Enlarge It feels like Oracle Corporation (ORCL) has been transitioning to cloud-based services forever. It’s a tough process that weighs on results, but it is indeed working. It also helps when it tamps down Wall Street’s earnings expectations.
Investors saw promising acceleration in its cloud business last quarter, sending shares on a nice run. Now they’re trying to hold onto those gains.
Happily, ORCL remains well above its 50- and 200-day moving averages. Additionally, the key levels recently intersected to form the buy signal of a golden cross.
Impressive seasonality also helps Oracle’s case. Over the last decade, shares delivered an average price gain of 3.2% in April, according to Thomson Reuters Stock Reports.
April Stocks to Buy: Wynn Resorts, Limited (WYNN)
The market is trying to get ahead of the resort and casino company’s next big thing. It’s opening the Wynn Palace on the Cotai Strip in Macau in July or August, and some analysts are bullish for its prospects.
WYNN was trapped under its 50-day MA for about a year-and-half thanks to the slump, but it just broke out following a golden cross. If WYNN shares make a successful test of that level, the outlook will improve greatly.
It also helps that this is a great time of year for Wynn Resorts. Shares gained an average of 13.3% over the last 10 years.
April Stocks to Buy: The Western Union Company (WU)
Shares are up about 20% since kicking off the year with a new 52-week low and momentum abounds. WU is making higher highs and higher lows and has now busted through its 50- and 200-DMAs, a place where it hasn’t traded since last spring. The stock is also in the process of carving out a golden cross.
As for seasonality, WU has put up an average price gain of 4% over the last decade, following that up with a 0.5% increase in May.
Pressure from other payments processors remains a concern, but in the technicals paint a bright short-term picture.
April Stocks to Buy: Symantec Corporation (SYMC)
SYMC has been struggling below its 50-, 200-DMA or both, for almost a year, but has found some surprising momentum in the last few months. Shares bounced off a 52-week low in January, rising about 25% since then.
On the way they cleared their 50- and 200-DMAs in convincing fashion, describing a golden signal in the process. Longer-term, SYMC is still in a downtrend, but it looks good for a little more pop this month.
It’s also somewhat comforting to know that shares have gained an average of 1.7% over the last 10 years.
April Stocks to Buy: Eaton Corporation, PLC Ordinary Shares (ETN)
But now it appears that the market is having second thoughts about how much it beat this name down. Any bargain hunters coming into the market back in July surely picked up some Eaton. ETN is up about 25% over the last three months.
This 2016 rally allowed Eaton to break above its 50-DMA in convincing fashion and then its 200-DMA. Shares made a golden cross recently and even made a successful test of support.
Price momentum is on ETN’s side and seasonality is favorable as well. The stock has seen April deliver an average price gain of 3.1% over the past decade.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.