The Best And Worst Stocks In The Dow For Q2

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Includes: AA, AXP, BA, BAC, CAT, CSCO, CVX, DD, DIS, GE, HD, HPQ, IBM, INTC, JNJ, JPM, KO, MCD, MDLZ, MMM, MRK, MSFT, PFE, PG, T, TRV, UTX, VZ, WMT, XOM
by: Todd Campbell

In any given period, most stocks post middle of the road seasonality. What is important isn't the price cycles of those hovering around the Mendoza line. Instead, focusing on outliers - those with the best and worst seasonality - offers profit-boosting insight for timing entries and exits.

In Q2, the best seasonality belongs to beverage giant Coca Cola (KO). It's not hard to guess why beverage stocks tend to post gains heading into the warm summer months. After all, a cold soda is the perfect complement to cookouts, family reunions and yard work.

But Coca Cola isn't the only stock posting above normal seasonality in the second quarter. Defense and plane maker Boeing (BA) enjoys seasonal tailwinds into the summer air show season. One of the biggest trade shows this year will be in Farnborough, U.K., in July. This show will offer plenty of price moving news regarding products and plane orders.

Intel (INTC) is another perennial winner in Q2. Historically, investors bid this chip maker up ahead of Q3, which is the company's strongest sales quarter. The SEMI book-to-bill, which stands at 1.01 currently, historically peaks in Q2 or Q3 as electronics manufacturer's build inventory for end of year product launches.

The other notable strong performers this coming quarter include Merck (MRK), with its attractive 4.3% dividend yield, AT&T (T), another top dividend play with a yield of 5.6%, and United Technologies (UTX), which like Boeing benefits from the airplane order cycle.

The following table, courtesy of The Seasonal Investor, shows seasonality for all Dow Jones 30 components, ranked descending by seasonal strength.

Dow Jones 30 Years Up
Stock Symbol SECTOR (of 10) Average
Coca Cola KO CONSUMER GOODS 8 2.78%
Boeing BA INDUSTRIAL GOODS 7 8.07%
Intel INTC TECHNOLOGY 7 3.67%
Merck & Co. MRK HEALTHCARE 7 3.15%
AT&T T TECHNOLOGY 7 1.19%
United Tech. UTX CONGLOMERATES 7 4.78%
American Express AXP FINANCIALS 6 10.09%
Bank of America BAC FINANCIALS 6 5.79%
Caterpillar CAT INDUSTRIAL GOODS 6 3.42%
Kraft Foods KFT CONSUMER GOODS 6 4.79%
McDonald's MCD SERVICES 6 6.46%
Three M Co. MMM CONGLOMERATES 6 3.15%
Microsoft MSFT TECHNOLOGY 6 1.58%
Procter & Gamble PG CONSUMER GOODS 6 -0.40%
Travelers Cos. TRV FINANCIALS 6 0.68%
Exxon Mobil XOM BASIC MATERIALS 6 0.57%
Cisco Systems CSCO TECHNOLOGY 5 -0.12%
Chevron CVX BASIC MATERIALS 5 4.23%
Int'l Business Machines IBM TECHNOLOGY 5 -2.79%
Johnson & Johnson JNJ HEALTHCARE 5 -0.37%
J P Morgan JPM FINANCIALS 5 2.14%
Pfizer PFE HEALTHCARE 5 -1.76%
Wal-mart WMT SERVICES 5 -2.66%
Alcoa AA BASIC MATERIALS 4 3.06%
Dupont DD BASIC MATERIALS 4 -0.16%
Disney DIS SERVICES 4 0.30%
General Electric GE CONGLOMERATES 4 -3.65%
Home Depot HD SERVICES 4 -2.75%
Hewlett-Packard HPQ TECHNOLOGY 4 1.98%
Verizon VZ TECHNOLOGY 4 -0.01%
Source: The Seasonal Investor
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Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in INTC over the next 72 hours.