In this article, we discuss 11 best seasonal stocks to buy now. If you want to read about some more seasonal stocks to buy now, go directly to 5 Best Seasonal Stocks to Buy Now.
There is a lot of interest around the long-term investing strategies of investors like Warren Buffett and Charlie Munger as the stock market is battered due to soaring inflation and rising interest rates. Growth-heavy portfolios have taken a severe beating and investors are shying away from short-term market ideas in light of the developing situation. However, short-term ideas, or investing in seasonal stocks, is not always the worst idea. Research by web publication Capital shows that seasonal trends are an important part of the stock market.
Per the publication, over the past fifty years, September has been the worst month for the market overall. When viewed in the context of the Lehman Brothers collapse in September 2008, which led one of the worst financial meltdowns in history, this makes a lot of sense. However, there is more to this than just that. Data reveals that September is the only month in the past 50 years in which the benchmark S&P 500 index recorded a negative average return of 0.8%, even after removing the Lehman collapse from the equation.
In addition, no major advanced country equity index demonstrates a positive historical average return in September. The figures suggest a clear bias and give weight to the time-honored traditions at the stock market wherein investors tend to jump in before summer or holiday travel begins and jump out during periods of slowdown. Some of the best seasonal stocks to monitor in this context include The Walt Disney Company (NYSE:DIS), The Home Depot, Inc. (NYSE:HD), and The Mosaic Company (NYSE:MOS).
Our Methodology
The companies that tend to outperform the wider market only at certain times of the year were selected for the list. The analyst ratings of these firms and the latest updates related to them are also discussed to provide some additional context. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Image by Sergei Tokmakov Terms.Law from Pixabay
Best Seasonal Stocks to Buy Now
11. Redfin Corporation (NASDAQ:RDFN)
Number of Hedge Fund Holders: 19
Redfin Corporation (NASDAQ:RDFN) operates as a residential real estate brokerage company in the United States and Canada. The firm features on the list of best seasonal stocks to invest in. The company tends to perform well during the summer season as home sales and prices register an increase. Conversely, as sales and prices decline during the winter season, so do revenues for the company. The firm directly employs real estate agents and has a fixed cost structure compared to peers.
On July 12, investment advisory KeyBanc initiated coverage of Redfin Corporation (NASDAQ:RDFN) stock with a Sector Weight rating. Analyst Justin Patterson issued the ratings update.
At the end of the second quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $279.9 billion in Redfin Corporation (NASDAQ:RDFN), compared to 23 in the previous quarter worth $565.6 million.
Just like The Walt Disney Company (NYSE:DIS), The Home Depot, Inc. (NYSE:HD), and The Mosaic Company (NYSE:MOS), Redfin Corporation (NASDAQ:RDFN) is one of the best seasonal stocks to buy now according to hedge funds.
In its Q2 2022 investor letter, Saga Partners, an asset management firm, highlighted a few stocks and Redfin Corporation (NASDAQ:RDFN) was one of them. Here is what the fund said:
“The Portfolio first bought Redfin Corporation (NASDAQ:RDFN) in Q2’21. Redfin’s competitive advantage stems from its ability to integrate the demand aggregated from their web portal with full-time salaried agents. Because Redfin agents do not have to prospect for demand, they are more productive than traditional agents, providing Redfin with a lower cost per transaction compared to traditional real estate brokerages. The two other major real estate web portals, Zillow and Realtor.com, have different business models where third party agents advertise on their website. The web portals do not help agents become more productive but simply generate leads and therefore are part of the advertising costs of the traditional real estate value chain.
With barely a year of ownership, we have not really had enough time to evaluate longer-term trends since first buying Redfin, but in our first year, results have come in below what I would expect long-term trends to be. Since COVID, the housing market has been all over the place. It essentially froze during Q2’20, rebounded in H2’20 through 2021, and has since declined in 2022. Home prices have skyrocketed after COVID as housing inventory couldn’t keep up with demand and reached unsustainable levels as measured by historic values to household income levels. As mortgage rates have increased, home prices have barely dropped, causing home affordability and demand to drop. The overall housing market has continued to struggle in the first half of the year. Existing home sales continue to fall, with July declining 19% year-over-year. As a result, Redfin’s real estate transactions fell 4% year-over-year in Q2’22, the first decline (with the exception of Q2’20) since being a public company…read more
10. Lennox International Inc. (NYSE:LII)
Number of Hedge Fund Holders: 26
Lennox International Inc. (NYSE:LII) designs, manufactures, and markets a range of products for the heating, ventilation, air conditioning, and refrigeration markets. The company is one of the most prominent seasonal stocks to invest in. On July 28, the firm posted earnings for the second quarter of 2022, reporting earnings per share of $5.00, beating estimates by $0.25. The revenue over the period was $1.3 billion, up over 11% compared to the revenue over the same period last year and beating analyst expectations by $30 million.
On August 1, Wells Fargo analyst Joseph O’Dea maintained an Equal Weight rating on Lennox International Inc. (NYSE:LII) stock and raised the price target to $249 from $229, appreciating the second quarter earnings of the firm.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Balyasny Asset Management is a leading shareholder in Lennox International Inc. (NYSE:LII), with 609,568 shares worth more than $125.9 million.
9. Mattel, Inc. (NASDAQ:MAT)
Number of Hedge Fund Holders: 33
Mattel, Inc. (NASDAQ:MAT) is a children’s entertainment company that designs and produces toys and consumer products worldwide. The firm is among the best seasonal stocks to invest in. The company tends to do well in terms of revenue and sales just ahead of the holiday season since that is when there is a huge rise in demand for the products it sells. Some of the famous brands it owns include Barbie, Monster High, American Girl, Polly Pocket, Spirit, and Enchantimals, among a host of others.
On August 18, Bank of America analyst Jason Haas initiated coverage of Mattel, Inc. (NASDAQ:MAT) stock with a Buy rating and $31 price target, noting that the company has successfully completed its turnaround and is now in growth mode.
Among the hedge funds being tracked by Insider Monkey, Tennessee-based firm Southeastern Asset Management is a leading shareholder in Mattel, Inc. (NASDAQ:MAT), with 1.6 million shares worth more than $360 billion.
In its Q3 2021 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and Mattel, Inc. (NASDAQ:MAT) was one of them. Here is what the fund said:
“Mattel, Inc. (NASDAQ:MAT) (24%, 1.40%; 16%, 0.96%), the global toy and media company, was a strong contributor in the fourth quarter and for the year. Despite store closures in Asia causing -20% regional revenues during the third quarter, Mattel’s consolidated sales still grew 8% due to its strong North American recovery. Barbie sales remain impressive as they have been for years, American Girl is finally returning to growth and Fisher Price is also recovering. The company is successfully passing through inflated costs with higher pricing and without losing volume. Despite the impressive results, the stock trades too low at less than 14x forward earnings, and that is before Mattel begins to monetize its massive non-earning asset Intellectual Property portfolio. Our appraisal of the value grew by more than 30% this year.”
8. Pool Corporation (NASDAQ:POOL)
Number of Hedge Fund Holders: 40
Pool Corporation (NASDAQ:POOL) distributes swimming pool supplies, equipment, and related leisure products in the United States and internationally. The firm is among the best seasonal stocks to invest in. Many of the products marketed by the firm are for the summer season and so the stock tends to perform very well in the summers. The firm also has a solid dividend profile. On July 28, it declared a quarterly dividend of $1.00 per share, in line with previous. The forward yield was 1.11%.
On August 17, investment advisory Deutsche Bank initiated coverage of Pool Corporation (NASDAQ:POOL) with a Hold rating and $431 price target. Analyst Joe Ahlersmeyer issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in Pool Corporation (NASDAQ:POOL), with 1.2 million shares worth more than $42 million.
In its Q1 2022 investor letter, Carillon Towers Advisers, an asset management firm, highlighted a few stocks and Pool Corporation (NASDAQ:POOL) was one of them. Here is what the fund said:
“Pool Corporation (NASDAQ:POOL) is the world’s largest wholesale distributor of swimming pool supplies, equipment, and related leisure products. After an impressive run, the shares cooled off a bit as investors took some profits on stocks that were perceived to have benefitted from the pandemic. Despite this, the firm continues to see strong demand and remains well positioned to capitalize on a number of firmly established secular trends. Migration trends toward the Sunbelt as well as the desire consumers have shown to invest in their outdoor living and entertainment spaces have resulted in healthy fundamentals for the pool industry going forward.”
7. Tractor Supply Company (NASDAQ:TSCO)
Number of Hedge Fund Holders: 41
Tractor Supply Company (NASDAQ:TSCO) operates as a rural lifestyle retailer in the United States. It is one of the top seasonal stocks to invest in. The firm markets equine, livestock, pet, and small animal products necessary for their health and the growth of farms. As such, the stock of the firm tends to perform well during plowing and harvesting seasons, but is more vulnerable to macro pressures during the rest of the year. The firm is based in Brentwood and was founded in 1938.
On July 22, Truist analyst Scot Ciccarelli maintained a Buy rating on Tractor Supply Company (NASDAQ:TSCO) stock and raised the price target to $252 from $246, appreciating the strong second quarter earnings report of the firm.
At the end of the second quarter of 2022, 41 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Tractor Supply Company (NASDAQ:TSCO), compared to 43 the preceding quarter worth $1 billion.
In its Q4 2021 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Tractor Supply Company (NASDAQ:TSCO) was one of them. Here is what the fund said:
“Tractor Supply Company (NASDAQ:TSCO) contributed favorably to performance during the quarter. Demand from the Company’s niche, affluent rural customer base continues to surge in a post-COVID world with comparable store sales running over +40% higher compared to pre-pandemic (2019) levels. Tractor Supply is seeing growth across all channels, from its website to e-commerce that is fulfilled by its 2000-store fleet to regular in-store traffic. The Company is also managing inflation and supply chain disruptions extremely well, passing through nearly +7% of inflation on consumable goods and managing a quarterly inventory in-stock rate that was actually higher than pre-pandemic. Tractor Supply is an exceptional retailer, and we continue to hold it as a top position.”
6. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 49
Delta Air Lines, Inc. (NYSE:DAL) provides scheduled air transportation for passengers and cargo in the United States and internationally. It is one of the elite seasonal stocks to invest in. Dan Janki, the CFO of the firm, recently told The Wall Street Journal that leisure travel demand remained encouraging for the firm as business travel was on the mend. He added that margins for the firm were expected to improve as the company right-sizes capacity and reduces spending plans.
On August 15, investment advisory Melius Research initiated coverage of Delta Air Lines, Inc. (NYSE:DAL) stock with a Buy rating and $41 price target. Analyst Conor Cunningham issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, California-based investment firm Citadel investment Group is a leading shareholder in Delta Air Lines, Inc. (NYSE:DAL), with 4.9 million shares worth more than $141.6 million.
Alongside The Walt Disney Company (NYSE:DIS), The Home Depot, Inc. (NYSE:HD), and The Mosaic Company (NYSE:MOS), Delta Air Lines, Inc. (NYSE:DAL) is one of the best seasonal stocks to buy now according to hedge funds.
In its Q4 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Delta Air Lines, Inc. (NYSE:DAL) was one of them. Here is what the fund said:
“We’ve healed greatly from the worst days of the pandemic, and we expect that to continue going forward. We see the greatest disconnects between current market expectations and 18-months-out fundamentals in names like Delta Air Lines, Inc. (NYSE:DAL).
Delta is a quality airline with shareholder-friendly management. It was the only one not to issue equity during the pandemic. It was also the only profitable airline in the second half of 2021. It generated positive operating cash flow despite business and international travel weakness. When earnings finally normalize, which the company doesn’t expect until 2024, it should earn more than $7/share. After bouncing significantly off the lows, DAL currently trades at $41.99 or less than 6x those earnings.
We’ve believed for over a decade that the US airlines are better businesses than they’ve historically been. Consolidation led to a more rational industry. These companies shifted from growth at any cost to a return on capital mindset, the importance of which can’t be understated. We previously believed a recession would finally demonstrate the group’s improved resilience (…read more)
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Disclosure. None. 11 Best Seasonal Stocks to Buy Now is originally published on Insider Monkey.