Select Stocks for the "Best Months"

10/19/2016 9:00 am EST

Focus: STOCKS

Jeffrey Hirsch

Editor-in-Chief, The Stock Trader's Almanac and Almanac Investor

This basket of stocks is being presented in order to take advantage of the “Best Six Months” for stocks, which based on seasonality, run from November to April, states Jeffrey Hirsch, editor of the Stock Traders Almanac.

These 14 stocks all have reasonably solid valuations, healthy revenue and earnings growth, while exhibiting positive price and volume action as well as other constructive technical and chart pattern indications.

The group covers a broad array of sectors and industries. It also runs the gamut of market capitalization with a mix of large caps with more than $5 billion in market value, midcaps in the $1-5 billion range, and small caps under $1 billion.

We first sifted through the universe of about 8,000 US traded stocks for those with a market cap of at least $25 million and average daily volume of 50,000 shares or more on average over the past twenty trading sessions.

Then we winnowed the list down to only those stocks with relatively low price-to-sales and price-to-earnings ratios. From there we looked for stocks that were exhibiting revenue and earnings growth.

With this list of about 50 stocks we dug into each individual company and chart before settling on these final 14 stocks.

Small cap -- less than $1 billion

IES Holdings (IESC)
AV Homes (AVHI)
Century Communities (CCS)
Preferred Bank (PFBC)
M/I Homes (MHO)
Sucampo Pharma (SCMP)
First Busey (BUSE)

Mid cap -- more than $1 billion, less than $5 billion

Ameris Bancorp (ABCB)
United Community Bank (UCBI)
Sabra Healthcare REIT (SBRA)
Corelogic (CLGX)
Western Alliance (WAL)
Semiconductor Mfg. ADR (SMI)

Large cap - more than $5 billion

Arista Networks (ANET)

Our underlying theme was to find reasonably priced stocks quietly growing sales and earnings that are flying somewhat under the radar with few on Wall Street paying close attention to them.

As market cap goes higher, this becomes increasingly challenging and a history of earnings surprises becomes even more important. 

At the end of the screening process we found that homebuilders, technology, medical and financial industries were well represented in the basket.

We did not search specifically for top-performing stocks within these sectors, this just happens to be where reasonable value and growth currently exist.

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Editor’s Note: Jeffrey Hirsch will be a featured speaker at the upcoming MoneyShow Dallas, October 19th through 21. Register for free here.

By Jeffrey Hirsch, Editor of the Stock Traders Almanac

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