January is generally a good month for stocks. This year’s January certainly was, with the S&P 500 gaining 2%. But the same can’t be said for February, which typically is a loser for investors. That’s why if you want to end this month in the black, you’ll need to be more strategic about identifying stocks to buy than you typically have to be.
Historically, the S&P 500 loses a bit of ground in February, and that’s bad enough. But when it’s the first February of a presidential term, the month is particularly difficult. The S&P 500 has on average given up 2% of its value in the first February under a new president.
That’s not to say every stock suffers during the second month of the year, however. Indeed, several stocks are reliably February winners and deserve a spot in a list of potential stocks to buy at this time of year.
Here’s a closer look at your top five stocks to buy for February. In no particular order …
5 Stocks to Buy for February: Visa (V)
Click to Enlarge Credit card middleman Visa Inc (NYSE:V) may be one of the market’s best-kept secrets, logging an average annual gain of 30% since its 2008 IPO.
That’s not to say it’s moved in a straight line every year, though. In fact, its typical 6.5% gain in February is usually set up by a fairly big January pullback. Note that V stock didn’t give us that January lull this time around.
That said …
For better or worse, perhaps the big reason Visa has become one of the top stocks to buy in February is that its fiscal first-quarter numbers are posted as January transitions into the next month, and holiday shopping activity is typically robust. That’s fine until shoppers decide one year to tighten the purse strings, but that doesn’t appear to have been the case this year.
Visa will post its Q1 results on Thursday after the bell.
5 Stocks to Buy for February: Lowe’s (LOW)
Click to Enlarge Home improvement retailer Lowe’s Companies, Inc. (NYSE:LOW) just never seems to do quite as well as rival Home Depot Inc (NYSE:HD) does.
And more recently, homebuilding enthusiasm waned in January just one month after rallying to multiyear highs. That was a short-lived surge, and it suggests home construction may not be poised for growth after all.
However, when one takes a step back and looks at the data beyond one month, there’s no way of denying that the purchases of new homes are continuing to trend higher, yet still are below long-term average levels. There’s room and reason to expect home construction (and home decorating/remodeling) activity to continue moving forward.
There’s also room and reason to think Lowe’s shares will do especially well this month. LOW usually gains 4.4% in February, and so far this year is tracing its usual performance path.
5 Stocks to Buy for February: CVS Health (CVS)
Click to Enlarge While most of the latter half of the year is downright lethargic for CVS Health Corp (NYSE:CVS), the first half of the year is almost strangely bullish.
That strength just to happens to kick off in February, with a 5.1% average gain.
Yes, 2016 (and really, since mid-2015) was downright miserable for CVS shareholders, as the pharmacy chain lost a couple of key pharmacy benefit manager (PBM) alliances and rivals Rite Aid Corporation (NYSE:RAD) and Walgreens Boots Alliance Inc (NASDAQ:WBA) came close to teaming up.
Enough is enough, though.
The fact that CVS is down 20% in the past 52 weeks only makes it that much more ripe for a rally this month, as observers are starting to see some real value.
5 Stocks to Buy for February: Walt Disney (DIS)
Click to Enlarge Walt Disney Co (NYSE:DIS) is almost a cliche (an all-too obvious one), earning a spot on most lists of stocks to buy for “XYZ” reason.
Nevertheless, if you’re looking for another reason to own DIS shares sooner than later, here’s one more: The stock dishes out gains of 4% this month, on average, and 2017 so far is shaping up to be a typical year, performance-wise.
Fanning these flames is another box-office hit. The latest entry in the Star Wars franchise, Rogue One, has driven ticket sales of more than $1 billion. Now if it can just figure out what to do with ESPN …
Disney will report last quarter’s results on Tuesday, Feb. 7.
5 Stocks to Buy for February: Broadcom (AVGO)
Click to Enlarge Last but not least, Broadcom Ltd (NASDAQ:AVGO) might be the least recognizable name of the five under the microscope today, but based purely on its February performance, it’s arguably the most deserving of inclusion in this list of stocks to buy now.
See, AVGO has averaged a 9.1% gain for the current month going all the way back to 2010.
Granted, January’s 12.2% advance may not have left much (if any) room for more upside … at least not until after a healthy pullback. It’s worth watching all the same, though, and may be worth holding onto even after February.
Broadcom, by the way, makes semiconductors, and is a key supplier of components for the Apple Inc. (NASDAQ:AAPL) iPhone. And it looks like Apple is firing on all cylinders again, selling a record number of the smartphone last quarter.
That bodes well for AVGO.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.