June is typically a solid month for stocks but tactical investors should always be looking for stocks to sell if they want to beat their benchmarks. As the saying goes, take care of the downside and the upside will take care of itself.Happily, the coming month tends to have more upside than down. Since 1928, the S&P 500 has generated an average June price gain of 0.7%, according to Yardeni Research. That’s a heck of a rebound from the May, which typically drops 0.2%.
Ideally, your tactical portfolio will ride the June performers and be spared the headwind of market laggards. Of course,that is so much easier said than done, but there are tools tacticians can use to improve their odds.
Technical indicators can sometimes be a reasonably helpful guide to short-term performance. It’s also a good idea to look at long-term seasonality. Whatever the reason, some stocks just don’t so well at this time of year. Fundamental anchors and and negative news flow also portend more downside for a struggling stock.
To that end, we screened the market for stocks that have a poor track record in June and have recently carved out the sell signal of a death cross. We also took into account any negative news flow or deteriorating.
With all that factored in, read on for the five stocks to sell for June.
June Stocks to Sell: Alaska Air Group, Inc. (ALK)
Click to Enlarge Alaska Air Group, Inc. (ALK) recently struck a deal to buy Virgin America Inc (VA), expanded service in California and was tapped to join the S&P 500. But it may not be enough to pull shares out of a nosedive.
Expansion risks and antitrust concerns are hurting ALK at a seasonally bad time. Over the last 10 years, ALK notched an average June price decline of 1.3%, according to Thomson Reuters Stock Reports.
The technicals don’t offer much hope either. Worries about making an acquisition in a softening economy pulled shares below the 50- and 200-day moving averages. They also made a death cross and aren’t close to testing key levels.
June Stocks to Sell: Costco Wholesale Corporation (COST)
Click to Enlarge Costco Wholesale Corporation (COST) jumped on quarterly earnings but those gain look precarious.
The retail sector is sick and COST just failed to grow its same-store sales for the first time in six years. A switch to Visa (V) from American Express (AXP) also helped revenue, but that’s a one-time shot.
COST is making a test of its 50- and 200-DMA’s, but even if it breaks through it will be hard pressed to hold on to gains. Shares recently went through a death cross and they’ve struggled to stay above key levels all year long.
It’s also a seasonally weak time. Average June performance is a loss of 0.7% over the last decade.
June Stocks to Sell: Goodyear Tire & Rubber Co (GT)
Click to Enlarge June tends to be a terrible time of year for Goodyear Tire & Rubber Co (GT). Indeed, on average it’s lost 5.6% over the last 10 years. This year looks like it will pretty typical too.
GT just carved out the sell signal of a death cross, and although it managed to arrest its recent slide on an analyst upgrade, the stock is still trading close to a 52-week low, and is well under key levels and a 52-week high.
For now, momentum remains to the downside as shares labor under the cloud of disappointing earnings and capacity constraints in the U.S. That could hold true until GT’s next reporting period.
June Stocks to Sell: Starbucks Corporation (SBUX)
Click to Enlarge Starbucks Corporation (SBUX) has struggled all year and market metrics say it will continue to do so in June. On a seasonal basis, SBUX has an average June loss of 0.7% over the last decade. The technicals are unfavorable too.
SBUX is far below a potential test of its 50- or 200-DMAs after failing to find support at either key level. More ominously, shares haven’t labored under their 200-DMA for this long in years. It doesn’t look like we’ll see a test anytime soon.
Lastly, SBUX is still trying to shake off the damage done by an early May death cross. A quarterly revenue has left a bad taste in investors’ mouths.
June Stocks to Sell: SolarEdge Technologies Inc (SEDG)
Click to Enlarge Solar stocks are having a rough time amid persistently low prices for oil and natural gas, and SolarEdge Technologies Inc (SEDG) hasn’t been immune. The stock has lost a quarter of its volume so far this year.
The biggest blow came after SEDG slashed its outlook for demand. Shares managed to find a bottom but momentum appears to be petering out.
SolarEdge made a recent death cross and is flattening out well below key levels. The 200-DMA is in a downtrend as well. On a seasonal basis, it gets worse. SEDG logs June and July losses of 2.9% and 15.1%, respectively.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.