As we head toward the midpoint of the investing year, stocks are positive but have delivered lackluster gains. The S&P 500 is up just 1.5% so far in 2016, a below average return even when annualized. The bar for outperformance might be low for tactical investors, but they still need to make the most of opportunities.
Luckily, June is a pretty good time to buy stocks for short-term market-beating returns. Indeed, the month has delivered an average price gain of 0.7% since 1928, according to Yardeni Research. But tacticians need more than seasonality on their side if they’re going to top that.
That’s why it’s imperative that traders and tacticians look for stocks to buy that display short-term technical strength and market-beating seasonality. Fundamental tailwinds and positive news flow also help, of course. Stocks throwing off buy signals will attract buyers, and upside momentum tends to fuel further gains as well.
- THE OTHER SIDE: 5 Stocks to Sell for June
We sorted through the market looking for names flashing technical buy signals and a history of market-beating performance in June. With those parameters in play, tacticians can have a reasonable level of confidence that these stocks — at least for now — have the odds on their sides.
June Stocks to Buy: Casey’s General Stores Inc (CASY)
Click to Enlarge Casey’s General Stores Inc (CASY) has been on a run since mid-April, picking up momentum on the way. The convenience store and gas station operator stumbled early in the year but has since picked up by expanding its prepared food offerings.
The market has certainly taken notice and the technicals suggest more upside to come. CASY made several successful tests of its 50-day moving average over the last month-and-a-half, all the while delivering higher lows and higher highs. To top it off, CASY carved out the buy signal of a golden cross a couple of weeks ago.
On a seasonal basis, CASY typically does well at this time of year. Over the last decade, shares have delivered an average price gain of 3.1%, according to Thomson Reuters Stock Reports.
June Stocks to Buy: EPAM Systems Inc (EPAM)
If EPAM can find support at that key level, shares should be good for a run up to its late-May high, if not beyond.
The fundamentals surely support more upside. EPAM, an IT company that’s partnered with SAP SE (SAP), reported solid first-quarter results, which were driven by continued strength in Eastern Europe. The bottom line matched Wall Street estimates thanks to record revenue and cost controls.
Seasonality is certainly on EPAM’s side. Over the last decade, the stock has gained an average of 4.5% in June.
June Stocks to Buy: Guidewire Software Inc (GWRE)
Shares typically gain 6.4% in June, 1.6% in July and another 7.8% in August. Past is not prologue, but if the trend persists, GWRE will easily be a market-beater.
The technical are on its side as well. GWRE made a number of successful tests of support at its 50- and 200-DMA throughout May, which eventually resulted in a late-month golden cross. At the same time, the 200-DMA is set to twist into an uptrend.
The software and services provider to the insurance industry is scheduled to report quarterly results after the market closes on Wednesday, offering a chance to see how the technicals hold up.
June Stocks to Buy: NuVasive, Inc. (NUVA)
The stock has generated almost unbroken upside since the market’s early 2016 lows. Although the rate of further gains is starting to slow, NUVA’s golden cross and lofty levels above both its 50- and 200-DMA suggest strength is yet to come.
It also helps that NUVA is entering a strong month of seasonality. Shares have generated an average price gain of 6.1% over the last 10 years, according to Thomson Reuters Stock Reports. July is usually good for an increase of 1.6%.
NUVA, a medical technology company focused on the spine, is enjoying remarkable international sales growth and has favorable demographics on its side as well.
June Stocks to Buy: Paycom Software Inc (PAYC)
Click to Enlarge Paycom Software Inc (PAYC) is likewise entering a period of strong seasonality. On average, the stock delivers a big market-beating return of 3.8% in June. This year is shaping up to deliver on that promise.
PAYC has been rolling since mid-April. Temporary consolidation might be in order early this month, but the trend should remain in tact. After all, PAYC stock just drove through a golden cross.
Furthermore, shares are well above their 50- and 200-day moving averages, so they have a ways to go before even threatening to test key levels.
In another bullish point, the cloud-based software-as-a-service provider recently declared a $50 million stock repurchase program. That’s a move that always delivers a tailwind.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.