3 Stocks Set Up for Monster Gains in May

It seems like only yesterday that we were talking about the stocks that would perform best in April. Well, the month has come and gone, and now we're looking ahead to May. Today, we'll be breaking down three of the best stocks to own in May, based on recent history. These top stocks include Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP), T-Mobile US Inc (NASDAQ:TMUS), and Visa Inc (NYSE:V).

Of course, this is just the tip of the proverbial iceberg. Below, you'll find a more comprehensive list of the best stocks to own in May over the last 10 years, courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. In order to make the list, these top stocks must have closed above $8 on Wednesday, and trade at least a million shares per day or have weekly options. Below the chart, we'll take a closer look at CTRP, TMUS, and V.

Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP)

CTRP has been an absolute beast in May over the past decade, advancing 70% of the time. On average, the stock has gained a brow-raising 11.2% -- more than any other stock on the list -- and last year tacked on 25.4% in May. More recently, the shares have rebounded strongly since their February lows, up 28.6% to their current perch around $45.66 -- and finding a foothold atop the 120-day moving average.

From a contrarian perspective, additional gains could be in store. Nearly 16% of CTRP's float is sold short, which represents approximately eight days of pent-up buying power, at the stock's average trading volume.

T-Mobile US Inc (NASDAQ:TMUS)

TMUS has advanced in seven of the past nine Mays, gaining 7.7%, on average. This top May stock outperformed last year, as well, soaring over 14% during the month. Meanwhile, since bottoming near $33 in February, the shares have been hitting a series of higher highs and lows -- with an assist from this long-term trendline -- and were last seen at $39.76.

TMUS short sellers may be reeling, given the stock's technical tenacity. During the latest reporting period, short interest fell 8.7%. However, it would still take roughly one week to buy back the 18.2 million shares sold short, at average daily trading levels. In other words, there's still plenty of sideline cash available to power TMUS even higher.

Visa Inc (NYSE:V)

Last of all, V has moved northward in six of the previous eight Mays. V has been especially strong of late, gaining 5.8%, 6%, and 4% in the past three Mays. More recently, V has been on fire since bottoming around $66 in February, save for last week's earnings-induced bear gap. Fortunately for bulls, the stock has since been consolidating atop the $77 level, which also served as support late last year, and could soon resume its upward trajectory.

As with the other top May stocks mentioned earlier, V could be set up for short-covering activity to act as a positive catalyst. Nearly 50 million shares are sold short, and it would take about seven sessions for short sellers to cover their positions, at the stock's average daily trading rate.