One would think the last month of the year, and the height of the holiday shopping season, would be wildly bullish for retail stocks. And to be fair, retailers are among the top stocks to buy for December.
Despite being painfully obvious (and a little cliche), retailing stocks gain an average of 2% during the last month of the year, versus the typical advance of 1.4% for the S&P 500.
So if not retailers, what are the top stocks to buy to finish the calendar year on a high note? More often than not, software stocks. Their average December gain is a healthy 2.14%, and the group makes some sort of gain in the month 65% of the time.
Here’s a look at the top five stocks to buy for December as we head into 2017.
Stocks to Buy: Microsoft (MSFT)
Click to Enlarge Up 24% since July’s low and within sight of new 52-week highs (what isn’t?), Microsoft Corporation (NASDAQ:MSFT) is tough to step into here … until you take a step back and look at what’s about to happen with the company. The deal to merge the iconic software name with LinkedIn Corp (NYSE:LNKD) is now just days away.
Although most observers have already mentally factored in what the two companies could accomplish when they become one, seeing it happen could really create some psychological traction.
Then there’s the other little pleasant surprise — Microsoft is leveraging the appeal of Azure, and rapidly growing its cloud business. In fact, Azure is projected to become even bigger than Amazon Web Services from Amazon.com, Inc. (NASDAQ:AMZN).
Stocks to Buy: Electronic Arts (EA)
Click to Enlarge Considering this is the busiest time of year for video game developer Electronic Arts Inc. (NASDAQ:EA), one would think EA shares would almost be too hot to handle.
One would be wrong in that assumption this year, though. Electronic Arts is down 10% from its early-October high, perhaps unable to shoulder the weight of a big runup from May.
EA has earned a spot on a list of stocks ready to rally this month, though. As a closer look at the daily chart indicates, the stock logged a long-tailed doji bar — a pivot indicator — on Friday of last week, which just so happens to be the day shares kissed the key 200-day moving average line (green) and started to put together a reversal effort. Take the hint at face value.
Stocks to Buy: NetScout Systems (NTCT)
Click to Enlarge NetScout Systems, Inc. (NASDAQ:NTCT) is likely the least familiar name on this look at the best stocks to buy for December.
NetScout Systems, a $3 billion outfit, performs a variety of computer system reliability/security services. Its flagship product is its nGenius line, which helps businesses keep their websites and networks humming.
It’s a profitable venture too, sporting a forward-looking price-earnings ratio of 14.9 right now, and expecting the bottom line to grow a respectable 16% next year.
Perhaps the most compelling reason of all to own NTCT at this time, though, is the simple fact that shares have just started another familiar bullish leg following a modest pullback during the latter third of November.
Stocks to Buy: Take-Two (TTWO)
Click to Enlarge Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is another video game maker, behind such titles such as Grand Theft Auto, Red Dead and Sid Meier’s Civilization.
Once a traditional seller of games on discs for consoles, Take-Two has added to its library of downloadable games with in-game purchases. The end result is better margins and a more reliable stream of revenue.
Where Take-Two Interactive Software shares really get interesting, though, is with its slow and steady advance. This oddly stable rise from TTWO stock has been in place since early this year, and arguably has been in place since the middle of last year.
The chart’s consistent rise is supported by the company’s consistent year-over-year growth, quarter in and quarter out.
Stocks to Buy: Citrix Systems (CTXS)
Click to Enlarge Finally, add Citrix Systems, Inc. (NASDAQ:CTXS) to the pile of stocks to buy for your best bet on a strong December.
Citrix Systems is a multi-faceted outfit that helps companies do things with their networks and websites that are a little bit too complicated to perform in-house. Virtual applications, security and file-sharing are just a handful of its core competencies.
Of the five companies in focus here, it boasts the most consistent revenue growth — one of the key upsides of subscription-based services.
The chart of CTXS has been broadly bullish, but choppy of late. There’s a method to the madness, though. Over the course of the past several months, Citrix Systems shares were squeezed into the tip of a wedge patterns. There’s little room left in the wedge, though, and it looks as if the bulls are going to take over now that a decision has to be made.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.