So far this summer, the market has managed to defy the odds, making progress at a time of year it usually doesn’t on hopes that President Donald Trump will further implement his economic-growth agenda. The S&P 500 Index, on average, is usually up 4.7% by late July, but this year it’s higher to the tune of 9.6%.
Yet, we’re about to enter an especially slow time of the year, leading up to one of only two months out of the twelve that generally dishes out a loss — September.
It’s conceivable that traders could use the recent rally as a profit-taking opportunity before the typical “September lull” strikes. With that as the backdrop, here’s a closer look at five stocks to sell much sooner than later.
Either they’re alarmingly overbought, usually perform poorly in August, or both. In no certain order:
Stocks to Sell for August: AbbVie (ABBV)
Click to Enlarge No matter how you slice it, the next three months are apt to be ugly ones for shares of drugmaker AbbVie Inc (NYSE:ABBV). Even in the average bullish year, ABBV peels back a couple of percentage points between the end of July and October’s low, and in an average year the stock gives up all of its 12% gain before hitting bottom in late October. (And if it’s a bearish year, yikes.)
There’s also the not-so-minor fact that AbbVie shares are starting August out technically overbought, up 20% for the year so far, earning it a spot on a list of stocks to sell sooner than later.
To that end, would-be profit-takers may have just gotten the excuse they needed to get the selling ball rolling. Earlier this week a jury concluded the company misrepresented its low-testosterone treatment AndroGel, and was . This first verdict is just one of many potential ones like it, which could nag at ABBV for years to come.
Stocks to Sell for August: Disney (DIS)
Click to Enlarge One would think Walt Disney Co (NYSE:DIS) would be a huge summertime winner, in that consumers tend to invest in what they see and experience, and there’s nothing more summer-like than a vacation to one of Disney’s theme parks or resorts.
Oddly enough though, summer is generally a tough time of year for Disney. There aren’t a lot of major sports events to drive TV-watchers to its ESPN property, and people are more apt to be outside enjoying the weather than inside watching television or going to the movies; they’re not really making the investment connection.
The end result? DIS stock usually loses 4% of its value between the beginning of August and the end of September. At best, it breaks even for the two-month stretch.
Just don’t tarry too long. With the next installment in the “Star Wars” franchise due later this year along with another “Avengers” sequel, Disney is well-armed for a strong finish to the year. It should have no problem justifying its usual gain during Q4.
Stocks to Sell for August: Allegion (ALLE)
Click to Enlarge If you’ve never heard of Allegion PLC (NYSE:ALLE), don’t worry about it — most people haven’t. It’s a security hardware company, and with a market cap of only $7.5 billion it doesn’t turn a lot of heads.
Whatever the case, it’s on this list of stocks to sell for one crystal clear reason: it rarely (if ever) has a bullish July-September stretch. On average, ALLE loses 11% of its value between the beginning of August and its September low. This time around could be even worse, as it’s being dropped from a higher-than-usual height.
That said, this is another name you don’t want to bet against for too long. ALLE shares are priced at an affordable forward-looking P/E of 18.7, while earnings are projected to grow 11.6% this year and 13.7% next year. The rising tide of smart-home and home security demand is lifting all of these boats.
Stocks to Sell for August: Quest Diagnostics (DGX)
Click to Enlarge Quest Diagnostics Inc (NYSE:DGX) is a name that needs no introduction or explanation. Unfortunately, it’s also a name that doesn’t need to be bought until mid-September … after it’s worked out all of its kinks.
DGX shares typically lose about 5% of their value between early August and late September, and more than that if it’s running ahead of its usual pace like it is this year.
The clincher: Quest Diagnostics posted a on Tuesday, and simultaneously . Not only did the stock not move higher in response, it peeled back, sending a loud message that little is going to motivate the bulls here.
Stocks to Sell for August: J B Hunt Transport Services (JBHT)
Click to Enlarge Last but not least, add J B Hunt Transport Services Inc (NASDAQ:JBHT) to your list of stocks to sell soon. Not unlike Walt Disney’s summertime lull, there are cyclical forces in play here as well as psychological ones.
Demand for trucking , but it does tend to fall out of sight for most investors. If there aren’t any interested buyers, a stock’s not going to rally no matter how worthy it may be.
That said, J B Hunt posted second-quarter earnings last week making it clear it was facing a — the kinds of costs that don’t abate quickly or easily. This reality check makes JBHT even more vulnerable to a near-term pullback than it usually is this time of year, and it usually gives up 8% of its value between the end of July and the end of September.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
