The 2 Strongest Seasonal Plays In The Nasdaq 100

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 |  About: C.H. Robinson Worldwide Inc. (CHRW), Includes: AMZN, CELG, DELL, FAST, GMCR, INTU, QQQ, SRCL, VRTX
by: Todd Campbell

With the market digesting Q1 returns, investors are reconsidering risk and hunting for tomorrow's winners.

But, before buying or selling, investors should consider the seasonality of stocks in their portfolio. Whether tied to inventory cycles or consumer spending patterns, seasonality is a valuable tool for determining whether it makes sense to be a buyer or seller.

With this in mind, I used data available from The Seasonal Investor to screen the NASDAQ 100 (NASDAQ:QQQ) for the seasonally strongest stocks and found two members with significant tailwinds. Both have posted gains in 9 of the past 10 Q2's.

The two best seasonal stocks in the NASDAQ 100 are C. H. Robinson and Stericycle.

C H Robinson Worldwide (CHRW) is a logistics player who makes its money coordinating customer freight shipments. In Q4, sales were up 10.4% year over year.

The freight business suffered mightily in the recession, but has bounced back as the economy has improved. Shippers remain focused on cost cutting and speeding product to market, which helped C. H. Robinson's arranged shipments increase to 10 million last year, up from 9.2 million in 2010.

It's shares yield 2% and are trading at 19.7x next year estimates, which is near the 5 year PE low. Typically, February is weakest for freight shipments, so any improvement from here is likely to force shorts sitting on 5 days of volume to cover.

Symbol

SECTOR

INDUSTRY

# Up Past 10 Years

Q2 Average Return

CHRW

SERVICES

AIR DELIVERY & FREIGHT SERVICES

9

7.40%

Click to enlarge

Stericycle (SRCL) is a waste management company focused on medical waste. The company collects waste from labs, hospitals and doctor's offices and disposes of it properly. It's a growing market supported by an aging population.

The company's earnings have increased from $1.03 per share back in 2005 to $2.85 in 2010. And, analysts expect the company to earn $3.30 in 2013, giving the stock a forward PE of 26, which is at the low end of its 5 year PE range. Much like C.H. Robinson, sellers are too pessimistic, holding 8 days to cover short, which suggests any positive news is likely to send shares higher.

Symbol

SECTOR

INDUSTRY

# Up Past 10 Years

Q2 Average Return

SRCL

INDUSTRIAL GOODS

WASTE MANAGEMENT

9

7.15%

Click to enlarge

Another 8 NASDAQ 100 stocks offer solid seasonality.

Across the NASDAQ 100 eight additional stocks post above average seasonality, posting Q2 gains in 8 of the past 10 years.

The list cuts across consumer, industrials, healthcare and technology and includes stocks ranging from the more recently troubled high flyer Green Mountain Coffee Roasters (GMCR), which is 62% off its high, to new high list member Celgene (CELG).

Given the NASDAQ 100 ETF has posted upside in 6 of the past 10 Q2's, these seasonally strong stocks offer investors an additional level of conviction heading into summer.

Symbol

SECTOR

INDUSTRY

# Up Past 10 Years

Q2 Average Return

GMCR

CONSUMER GOODS

PROCESSED & PACKAGED GOODS

8

18.67%

CELG

HEALTHCARE

BIOTECHNOLOGY

8

3.33%

VRTX

HEALTHCARE

DRUG MANUFACTURERS

8

14.13%

FAST

INDUSTRIAL GOODS

GENERAL BUILDING MATERIALS

8

5.71%

AMZN

TECHNOLOGY

INTERNET SOFTWARE & SERVICES

8

16.40%

DELL

TECHNOLOGY

PERSONAL COMPUTERS

8

8.10%

INTU

TECHNOLOGY

APPLICATION SOFTWARE

8

6.83%

Click to enlarge

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SRCL, CHRW, VRTX, CELG over the next 72 hours.