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|
|Coca Cola||KO||CONSUMER GOODS||8||2.78%|
|Merck & Co.||MRK||HEALTHCARE||7||3.15%|
|Bank of America||BAC||FINANCIALS||6||5.79%|
|Kraft Foods||KFT||CONSUMER GOODS||6||4.79%|
|Three M Co.||MMM||CONGLOMERATES||6||3.15%|
|Procter & Gamble||PG||CONSUMER GOODS||6||-0.40%|
|Exxon Mobil||XOM||BASIC MATERIALS||6||0.57%|
|Int'l Business Machines||IBM||TECHNOLOGY||5||-2.79%|
|Johnson & Johnson||JNJ||HEALTHCARE||5||-0.37%|
|J P Morgan||JPM||FINANCIALS||5||2.14%|
|Source: The Seasonal Investor|