3 Stocks That Could Outperform in September

Lululemon Athletica inc. (LULU), MannKind Corporation (MNKD), and Google Inc (GOOGL) may be on the verge of another strong September

by Josh Selway

Published on Aug 26, 2015 at 11:57 AM
Updated on Aug 26, 2015 at 12:00 PM

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, September has been the worst month for the S&P 500 Index (SPX) over the past 50 years. This fact is especially troubling now, since September tends to be the month after August. Still, we found three stocks that have historically outperformed during the month. Below is a chart of month-by-month performance of the SPX, followed by breakdowns of September outperformers Lululemon Athletica inc. (NASDAQ:LULU), MannKind Corporation (NASDAQ:MNKD), and Google Inc (NASDAQ:GOOGL), as we look to see if they could be poised for another strong month.

SPXSept

Let's start with clothing firm LULU, which has put in positive showings in all but one September since going public in 2007. The stock has actually boasted double-digit wins five times during the month, leaving it with an average September gain of 12.8%. 

lulusep

More recently, Lululemon Athletica inc. has managed to outperform the SPX by nearly 11 percentage points during the past 60 sessions, and was last seen 2.3% higher today at $60.07. Regardless, it remains a favorite of short sellers. Short interest jumped 13.3% during the two most recent reporting periods, and now accounts for over 18% of the stock's float. At LULU's average daily volumes, it would take these bears more than 12 sessions to buy back their bets. If the shares can continue to outperform, there's plenty of sideline cash to drive them higher. 

Next is MNKD. The biotech stock sports only two negative Septembers going back to 2005 -- albeit they're the two most recent. On average, the shares have ended the month 9.3% higher. Shareholders will welcome any positive news with open arms right now: the stock has lost more than half its value since touching an annual high of $7.88 in February, hitting a two-year low of $3.25 just today. The shares were last seen hovering near $3.38.

MNKDSep

As far as short interest goes, MannKind Corporation has LULU beat. Almost 44% of the equity's float is sold short, representing 19 times its normal trading pace. If an upward move can shake some of these bears, MNKD could be in store for another strong September. 

GOOGL is the last stock on our list. Though its average gain for September -- 4.7% -- isn't as impressive as LULU's and MNKD's, the Internet powerhouse has outdone both on the charts more recently. The shares shot to an all-time high shortly after the company's earnings beat in mid-July, and were last seen 4.1% higher at $637.70. 

GOOGLSep

As you can see, Google Inc hasn't had a negative September since 2011. A reversal of option trader sentiment could help the security extend this streak. Specifically, GOOGL's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.68 is higher than 83% of readings from the past year. In simpler terms: put buying has recently been much more popular than normal. 

We'll see if the data has pointed us in the right direction again; two of the stocks we examined in our August study outperformed the broader SPX. You can find the entire list of September outperformers below. 

Sepstocks


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