Back to top

Image: Bigstock

5 Stocks to Make the Most of the Halloween Effect

Read MoreHide Full Article

Analysts time and again have applied technical and fundamental analysis to determine the value of a stock before placing a buy order. However, on many occasions, they tend to apply unconventional methods like cycles and dates to buy stock. And one of the unorthodox methods is the Halloween effect, Halloween indicator, or Halloween strategy, which is nothing but a market timing strategy to make the most of the stock market returns.

The Halloween effect shows that the stock market primarily performs better from Oct 31 (Halloween) to May 1, or the “winter” months, compared to the more or less flat returns in the “summer” months that begins from May till the end of October. Interestingly, historically, the strategy to buy in November and sell in May has been successful 80% of the time when deployed over five years, while it has been successful for more than 90% when applied in a 10-year time frame.

Professors Ben Jacobsen of the TIAS School for Business and Society and Cherry Zhang of Nottingham University Business School too added that Halloween is the best time to buy stocks. After all, their report noted that stock market returns on average are 4% higher during the November-April time frame compared to the May-October period, citing a MarketWatch article.

But, it’s not just the Halloween effect that should bolster investors’ confidence. Recent economic data showed that third-quarter GDP increased faster than anticipated, and eased recession concerns. In fact, GDP from July through September advanced at an annualized pace of 2.6%, more than the Dow Jones prediction of 2.3%. With the economy registering its first positive period of growth this year, investors should no doubt be encouraged to place their bets on stocks linked to the health of the economy.

Thus, with a buying opportunity playing out in the stock market, investing in fundamentally sound stocks poised to grow in the near term seems prudent. We have highlighted five stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy), and a Growth Score of A or B, a combination that offer the best opportunities in the growth investing space.

CalMaine Foods (CALM - Free Report) is primarily engaged in the production, grading, packing and sale of fresh shell eggs, including conventional, cage-free, organic and nutritionally-enhanced eggs. CALM has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 43.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 197.8%. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Comstock Resources (CRK - Free Report) is an independent energy company engaged in the acquisition, development, production and exploration of oil and natural gas properties. CRK has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 11.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 219.8%.

Halliburton (HAL - Free Report) is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. HAL has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up nearly 3% over the past 60 days. The company’s expected earnings growth rate for the current year is 91.7%.

PBF Energy (PBF - Free Report) is a leading refiner of crude. Through five oil refineries and associated infrastructure in the United States, the company provides end products that comprise heating oil, transportation fuels, lubricants and many related products. PBF has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 11.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 950.4%.

Molina Healthcare (MOH - Free Report) is a multi-state managed care organization participating exclusively in government-sponsored healthcare programs. MOH has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 0.6% over the past 60 days. The company’s expected earnings growth rate for the current year is almost 31%.

Shares of CalMaine Foods, Comstock Resources, Halliburton, PBF Energy and Molina Healthcare, by the way, have already gained 53.7%, 120.8%, 57.2%, 253% and 11.4%, respectively, so far this year.
 

Zacks Investment Research


Image Source: Zacks Investment Research

Published in