One of the greatest mysteries of investing is timing entry and exit points. Too often, stocks fail to make investors money, not because of a failure in identifying a good stock or catalyst, but because the timing is wrong.
In my book, "Your Guide to Better Stock Picks: Tips from the Advisor's Advisor," I show readers how to separate the relevant from irrelevant. And, one of the most relevant pieces of information to consider is seasonality.
Last week, "5 Large Cap Stocks with Sizzling Seasonality Through July," showed you the best big caps to own heading into summer. Today, I highlight three mid cap stocks with a history of upside in the coming months. Despite summer doldrums, these three stocks historically beat the heat with above market returns.
These 3 Mid Caps offer the Best Seasonality through July
Crown Holdings Inc. (CCK). Summer BBQ's boost beverage sales, helping this aluminum can maker post gains in 5 of the past 5 3-month periods ending July. Its average gain in the period is 6.17%. The stock is trading 12.14x rising 2012 earnings per share forecasts and has beat analyst expectations in three of the past four quarters. Analysts are paying attention; increasing their 2012 earnings prediction to $3.35 per share next year, up from $3.17 90 days ago. Crown has $2.62 per share in cash and generates $689 million in operating cash flow. There are 2.6 million shares short, down from 2.79 million last month.
The sizzle: Anytime you pop a top or pull a six-pack from the fridge this summer you may helping your portfolio. Last quarter, the company sold 6% more beverage cans around the world than the prior year, benefiting as bottlers expand into new emerging markets in the Middle East, Africa, Asia and Latin America. The company will be able to sell even more cans in Brazil and China when new plants open this quarter. But, the company doesn't just benefit from quenching the world's thirst. It also sells food cans too, which offers advantages in developing nations where distribution is far from just-in-time and in disaster prone markets where consumers stockpile pantries. With the Atlantic hurricane season kicking off June 1st, now is a good time to buy.
Core Laboratories Nv (CLB). Muddy fields dry out in summer, which means Oil Company's can move more drilling equipment into place. This has helped well services company Core Labs post gains in 5 of the past 5 3-month periods ending July. Its 10.04% average gain is the best of the three and given the stock has fallen nearly 9% from its April high - investors should take notice. The stock is trading just shy of 21x rising 2012 analyst earnings expectations. Shale oil & gas exploration isn't a new concept, yet analysts remain too pessimistic. The company has beaten street estimates in three of the past four quarters - prompting analysts to increase their 2012 forecast to $4.62 per share, up from $4.30 earlier this year. Another story here is the short interest, which stands at a remarkable 20 days of average volume. Given the recent drop, large short interest and seasonal strength, short covering could help drive this stock higher into summer.
The sizzle: A lot of oil and gas exploration activity slowed down as winter weather turned to soggy spring out West. But, with the ground dry and oil prices far higher than 2010, a frenzy of rigs are getting active in places like the Bakken, Barnett and Eagle Ford shales. And, majors and independents alike are moving quickly to lock up acreage - hoping to find the next big strike. This good news for Core Labs, given they have some of the best mapping and reservoir management tools in the industry. Last quarter, record revenue and net income helped fund the repurchase of 550,000 shares and a 12% increase in its dividend.
Stericycle Inc. (SRCL). Summer weather means home improvement projects and Wiffle ball games. Unfortunately, every time we hit our thumb with a hammer or sprain an ankle rounding second base means a trip to the doctor. This has helped medical waste disposal company Stericycle post gains in 5 of the past 5 3-month periods ending July. On average, Stericycle has returned 7.94% in the period. Stericycle is trading 28.5x rising 2012 earnings estimates. The company has beaten analyst earnings forecasts in each of the past four quarters, prompting the Street to boost its prediction for 2012 to $3.22 from $3.19 60 days ago. Short sellers are too confident too, holding 6.1 days to cover short heading into summer.
The sizzle: Modern medicine is helping us live longer, but that also means we're making more trips to healthcare providers. Every blood test, gauze change and swab creates additional medical waste and that's good news for Stericycle's bottom-line. And, while the recession curbed our desire for co-pays, improving private sector job trends and Congressional mandates are increasing the number of insured. That's bullish for healthcare utilization, which is why two thirds of hospitals are taking on construction projects this year - most of which are tied to patient care. Also playing into Stericycle's hands is the every growing global population. Later this year, the world will play host to 7 billion people, up from 6 billion just 12 short years ago. Here in the U.S., our population is set to expand to 478 million from 311 million by the end of the century. More people living longer is a recipe for long term demand growth for Stericycle.
Just because you're going on vacation this summer doesn't mean your portfolio has to too. Using seasonality will help keep you ahead of the curve, answering the valuable question, when is the right time to invest.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CLB, CCK over the next 72 hours.