A Quick Look at November Seasonality

11/02/2012 6:00 am EST


Shedding some light on which components of the Dow have comprised the bulk of the gains over the years, Chris Prybal of Schaeffer's Investment Research highlights some noteworthy stocks.

As we enter November, and the beginning of the seasonally strong period for equities from November-April (opposite of “sell in May, go away”), I’d like to take a quick look at historical Dow Jones Industrial Average (DJI) returns since 1975.

In the table below, I highlight each of the 30 tickers that comprise the index. I have the table sorted by strongest to weakest based upon average November returns. The table is color coded, with green representing strength and red representing weakness within the index (table).

I also included each equities year-to-date percentage return in the far right column (it is also color coded similar to above parameters). I did this so the reader can have a frame of reference going into this new month on how each equity has fared so far this year.

Here are a few stats that stood out to me:

  • Cisco Systems (CSCO) historically outperforms in November. CSCO is in the red YTD, so the entity needs a late year boost to save time (and money) for shareholders. You could say similar things for Hewlett Packard (HPQ) (but not politely as HPQ has shed over 45% of its value this year alone….)
  • Home Depot (HD) and Wal-Mart (WMT) also illustrate strength in November. HD has been mentioned a lot as beneficiary of the damage related to Hurricane Sandy and WMT, with its re-introduced layaway policy, continues to attract frugal consumers.
  • Kraft Foods (KRFT) is the only Dow component that averages negative returns in the month of November (over the past 37 years). KRFT shareholders won’t fret, however, as KRFT recently split into two separate companies, one focusing on the domestic market (Kraft foods ticker is now KRFT) while the larger company Mondelez International (MDLZ) focuses on international growth opportunities.

Source: Forex.com and Bloomberg
Click to Enlarge

All in all, it appears that the majority of the components fare pretty well during the upcoming month.

As an index, November stands apart as one of the strongest months for the Dow in terms of percentage returns. I hope this post helped shed light on which components have comprised the bulk of these gains over the years.

by Chris Prybal, Quantitative Analyst, Schaeffer's Investment Research

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