Over the last 20 years, the S&P 500 has only moved higher in January 50% of the time and has fallen on average -0.5%. That makes January one of the seasonally weaker months of the year. While that is the case for stocks in general, there are a handful of stocks that tend to consistently rally in January. 

Equity Commonwealth (EQC) has moved higher in January 22 years out of the last 27 (81%). In the years the price has risen, the average gain is 5.33%. In the losing years, the price has typically fallen -3.5%. If a trade was opened and closed at the start and end of January, the average gain per trade would have been 3.7% over the last 27 years (includes wins and losses). The biggest January rally was 21.41%, while the biggest drop was -6.38%.

Aberdeen Asia-Pacific Income Fund Inc. (FAX) has moved higher in January 21 years out of the last 27 (78%). It is one of the least volatile stocks on the list. When it rises in January, the average gain is 4.27%. In years the stock falls in January, the average loss is -1.57%. This provides for a low risk/reward trade, where the potential gain is close to triple the typical loss. The average gain in January, including wins and losses, is 2.97%. The biggest January increase is 11.43%, while the biggest January decline is -3.98%.

Walt Disney Company (DIS) rallies in January 74% of the time (20 out of the last 27 years). In the years it rises in January, the average gain is 7.7%. In years the stock falls in January, the average loss is -6.99%.The average gain in January, including wins and losses, is 3.89%. The biggest January increase is 24.16%, while the biggest January decline is -8.85%.

Cirrus Logic Inc. (CRUS) rallies in January 73% of the time (19 out of the last 26 years). In the years it rises in January, the average gain is 17.22%. In years the stock falls in January, the average loss is -10.84%.The stock is more volatile than the others on the list, but investors are compensated by a higher potential profit. The average gain in January, including wins and losses, is 9.66%. The biggest January increase is 50.67%, while the biggest January decline is -20.49%.

Xilinx Inc. (XLNX) is another semiconductor stock, like Cirrus. The stock rallies in January 73% of the time (19 out of the last 26 years). In the years it rises in January, the average gain is 12.67%. In years the stock falls in January, the average loss is -4.35%. This gives the stock an attractive risk/reward ratio, with the potential gain nearly triple the average (historical) loss.The average gain in January, including wins and losses, is 8.09%. The biggest January increase is 40%, while the biggest January decline is -10.89%.

The Bottom Line

These statistics are historical and don't necessarily reflect what will happen this January. Seasonality should not be relied on exclusively. Rather, it is a tool traders can use to find stocks that tend to do well in certain months or at certain times of the year. To further enhance returns, traders can use fundamental analysis to aid in only picking stocks that are on solid financial footing. Technical analysis can be used to improve trade timing, instead of simply entering and exiting at the start and end of the month. 

Disclosure: The author doesn't have positions in the stocks mentioned. 

 

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.