As a record-breaking year for the equity markets draws to a close, investors are looking for any reason to stay in the game despite worries about historically high valuations and a long overdue market correction. Apart from long-established seasonal patterns that appear to favor stocks in general at this time of year, 10 specific stocks in the Dow Jones Industrial Average (DJIA) have a 30-year track record of delivering strong gains in December, CNBC finds, using analytic tools from Kensho Technologies.

Stocking Stuffers

The 10 Dow stocks identified by CNBC, with their average December gains since 1987, their month-to-date price moves through December 6, and their year-to-date price moves in 2017 through December 6, are:

  • The Home Depot Inc. (HD): +4.98%, +0.54%, +38%
  • UnitedHealth Group Inc. (UNH): +4.53%, -3.61%, +40%
  • General Electric Co. (GE): +4.18%, -3.44%, -43%
  • United Technologies Corp. (UTX): +3.95%, -0.21%, +13%
  • Nike Inc. (NKE): +3.92%, -0.83%, +20%
  • Goldman Sachs Group Inc. (GS): +3.59%, -0.68%, +4%
  • Travelers Companies Inc. (TRV): +2.39%, -0.15%, +13%
  • DowDuPont Inc. (DWDP): +2.31%, -1.23%, +28%
  • Cisco Systems Inc. (CSCO): +2.30%, +0.29%, +28%
  • Procter & Gamble Co. (PG): +2.13%, +1.40%, +12%

The study looked at the price changes from a theoretic purchase date of November 30 each year to a theoretic sell date of December 31. Note that DowDupont was formed in a merger finalized on August 31. The historical analysis by CNBC was conducted on predecessor company E.I. du Pont de Nemours & Co., former ticker symbol DD.

 

Tale of Four Stocks

Hardware and home improvement superstore Home Depot is singled out by CNBC not just for topping the list in terms of average December returns, but also for being up in 20 of the 30 Decembers studied. Strength in the housing market and a successful foray into e-commerce are fundamental reasons to be bullish on the company this December, CNBC adds.

Industrial and financial conglomerate GE, on the other hand, has been a troubled underperformer for a number of years. New CEO John Flannery has launched an ambitious restructuring plan that includes asset sales and spinoffs, following a severe cut to the dividend. Whether GE represents an undervalued turnaround play or a company in perhaps irreversible long-term decline is a matter for debate.

Investment banking firm Goldman Sachs, long among the most storied names on Wall Street, has had a rough 2017 marked by large trading losses earlier in the year, and disappointing trading results in subsequent months. An upbeat third quarter has turned a year-to-date loss on the stock into a modest gain. (For more, see also: Goldman's Q3 Earnings Encouraging, Revenues Up Y/Y.)

Regarding Nike, its lineup of footwear, apparel and sports equipment is bound to be on many holiday shopping lists. However, the company endured its lowest quarterly sales growth in seven years during its fiscal quarter that ended on August 31, per Reuters. Major impediments to sales growth are the loss of key retailers through bankruptcy, and pricing pressure from online sellers of competing products, Reuters adds.

Holiday Cheer

December tends to be best the best month for U.S. stocks overall, based the analysis of market data from 1950 onwards. This has been true for the Dow Industrials, the S&P 500 Index (SPX), the Nasdaq Composite Index (IXIC), and the Russell 2000 Index (RUT). (For more, see also: Why December May Be a Joy for Stock Investors.)

Additionally, the period from just before Christmas to shortly after New Year's Day typically has seen rising stock prices, not just in the U.S., but also around the world. This is the time frame for the so-called "Santa Claus rally." (For more, see also: Why the 'Santa Claus' Stock Rally Is at Risk.)

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