Jeff Bezos Has 2.72 Billion Reasons To Love September: The Ultimate Seasonal Portfolio

by: William Garrison

As we usher in the days of October, I believe there is a misguided perception among some investors that this month is a particularly dangerous time to be invested in the stock market. While it is true that October has produced two significant declines over the past thirty years (1987 and 2008), October actually has proven to be a pretty good starting point for a fourth quarter rally in many years. Over the past thirty years, the S&P 500 Index has advanced two-thirds times of the time during October, with an average return of 0.7% during the month. The median return for October is a more impressive 1.5% from 1983-2012. Looking at the entire fourth quarter, the S&P 500 Index has advanced in twenty-three of the past thirty years, with an average quarterly return of 3.8% and a median return of 5.4% (Source: S&P Dow Jones Indices LLC).

In addition to the seasonal trends observed in the overall stock market, I think there also can be significant value in looking at monthly seasonal trends of individual stocks. For example, I find it interesting that both Buffalo Wild Wings Inc. (NASDAQ:BWLD) and Chipotle Mexican Grill, Inc. (NYSE:CMG) have advanced during the month of March every year since they went public in 2003 and 2006, respectively. BWLD has had an impressive average return of 9.3% in March for the past ten years (median return of 9.5%), while CMG has had an average return in March of 11.2% (median return of 9.4%). Granted both of these wildly successful stocks have had a lot of positive monthly returns over the years (CMG has an average monthly return of 2.2% for the 102 months it has been public, and BWLD has an average monthly return of 2.0% over 118 months), but the March results are even more impressive. I haven't researched the topic enough to determine if there are positive restaurant pricing issues associated with March each year, or if chicken prices tend to go down in March, or simply if money managers get really excited about chicken wings and burritos during March Madness! Whatever the reason, I would enjoy knowing these statistics if I were a shareholder in either of these two companies.

With the help of some great screening tools in the premium section of iBankCoin, I looked to identify the twelve best stocks to own, one for each month of the year, from a seasonal perspective. My criteria for generating the list are as follows: 1) domestic stocks with a market capitalization of greater than $1 billion today, 2) stocks with at least ten years of price history, 3) stocks with a history of advancing at least 75% of the time during the month being analyzed, and 4) stocks which have produced an average monthly return of greater than 5% when the first three criteria have been achieved. I recognize that using average returns can skew the data. so I have also calculated the median return in an effort to take out the outliers but still demonstrate how strong some stocks are in certain months of the year.

As alluded to in this article's title, Amazon.com Inc. (NASDAQ:AMZN) has been a phenomenal performer in the month of September, and 2013 proved to be no exception. In its 17-year history as a public company in the month of September, AMZN has advanced 83% of the time, producing an average return of 11.6% for the month of September and a median return of 6.6%. In the most recent month, AMZN extended its impressive September statistics, advancing 11.3% during the month. AMZN has seen its stock price compound at better than 37% a year since going public in 1997, but investors also would be well served to know how strong the stock tends to be during September. As of today, it doesn't like Jeff Bezos sold any AMZN shares during the past month, which resulted in an increase of over $2.7 billion to his AMZN holdings.

Listed below are the top performers for each month of the year. There may be other stocks with better median returns since I used average returns over the time periods to generate the initial list of seasonal favorites. It should also be noted that I excluded any dividends from my return calculations. (Source: iBankCoin.com and Yahoo Finance).

      Years Years Flat Average Median
Month Company Ticker of Data to Up Return Return
October F5 Networks, Inc. FFIV 14 79% 24.40% 21.40%
November Rambus Inc. RMBS 16 81% 12.40% 11.80%
December NetApp, Inc. NTAP 17 78% 13.30% 9%
January Cheniere Energy LNG 12 83% 18.50% 17.70%
February Coeur Mining, Inc. CDE 23 78% 9% 5.30%
March GameStop Corp. GME 12 83% 12.40% 13.80%
April Medivation, Inc. MDVN 17 100% 17.20% 6.30%
May Express Scripts ESRX 21 76% 11.20% 3.90%
June Oracle Corp. ORCL 26 77% 8.60% 8.70%
July PolyOne Corp. POL 13 77% 8.40% 4.60%
August GameStop Corp. GME 12 83% 9.10% 8.50%
September Amazon.com Inc. AMZN 17 83% 11.60% 6.60%
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I am not specifically recommending the above-listed stocks, but I do want to emphasize that I think there can be great value in analyzing the seasonal trends of individual stocks and broader industries. I routinely look at these trends as part of my due diligence on a new idea or existing investment. If readers find this of interest, I will also publish the list of best short ideas for each month.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.