March and April are historically good months to be invested in stocks. The S&P 500 has moved higher during the month in 14 of the last 20 years (70%) and the average gain is 1.2%.
April is even better, moving higher during the month in 16 of the last 20 years with an average gain of 2%.
Certain stocks have performed much better than average over the last few decades. These include Linde, Pioneer Natural Resources, and Yum! Brands. All have produced average returns of over 7.4% during the trade period, with a win rate above 75%.
Cory Mitchell, an analyst with Trading.biz, mentions “Such statistical data can be useful for finding possible trade candidates, but is based on historical data. It doesn’t necessarily tell us what will happen this year.
With that in mind, of these three stocks, YUM stands out as it tends to have lower drawdowns and smaller losing trades (when they occur) than the two other stocks. When making short-term trades in these, or any stocks, limit losses to a small fraction of the account on any single trade because historic tendencies may not play out this year.”
Yum! Brands Inc. (YUM)
For the past 26 years, YUM has moved higher between March 22 and April 24 in 22 of those years (85%).
- Average return on 26 trades: 7.46%
- Biggest profit on a trade during the trade time frame: 50.05%
- Biggest loss on a trade during the trade period: -5.46%
- Biggest drawdown during an open trade: -10.91%
Drawdown is the biggest open loss experienced during a trade, while the biggest loss is the difference between the entry and exit prices based on the trade time frame.
Of the three stocks mentioned, YUM has the smallest drawdown and loss based on historic trades. It also has the lowest average return of the three.
Pioneer Natural Resources Company (PXD)
Over the last 26 years, PXD has moved higher between March 14 and April 18 in 20 of those years (77%).
- Average return: 10.08%
- Biggest profit: 30%
- Biggest loss: -11.26%
- Biggest drawdown: -18.26%
PXD has the highest average return on the list, even with the lowest win rate (77%). It has bigger losses and drawdowns compared to YUM.
Linde PLC (LIN)
Over the last 31 years, LIN has moved higher between March 6 and May 3 in 26 of those years (84%). Note that the prior stocks involved holding the trade for approximately one month, LIN’s holding period is closer to two months.
- Average return: 8.25%
- Biggest profit: 56.17%
- Biggest loss: -7.94%
- Biggest drawdown: -23.64%
LIN has a larger average profit than YUM, but lower than PXD. LIN’s biggest loss is larger than YUM yet lower than PXD. It has the largest historical drawdown during the trade period on the list.
Trading strong seasonal stocks
The following chart shows how all three stocks have performed over the last year.
These stocks have shown a historical tendency to do well during March and April. Seasonal tendencies don’t need to be relied on in isolation. Consider trend analysis and overall market conditions as well. Fundamentals may be considered as well.
Currently, major stock indices like the S&P 500 and Nasdaq 100 are in uptrends. YUM and LIN are in uptrends in 2024. PXD is pretty flat the last few months but recently moving up.
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