DGX stock and ESRX stock historically outperform in May
We're always breaking down seasonal data, helping traders locate the best stocks to buy each month and quarter. Schaeffer's Senior Quantitative Analyst Rocky White just passed along data for the best stocks to buy in May, based on historical returns. Looking at the average performance for exchange-traded funds (ETF), the healthcare sector has dominated the month. Going off this, two stocks that have tended to perform well in May are
Quest Diagnostics Inc (NYSE:DGX) and
Express Scripts Holding Company (NASDAQ:ESRX).
Quest Diagnostics Stock Has Contrarian Value
It's a great time to check in on DGX stock, too, as the shares hit an all-time high of $106.59 earlier today, and were last seen trading at $105.98. The stock sports a 12-month advance of 40%, thanks in part to an impressive earnings beat last Thursday, April 20. More gains could be in store for DGX, since it's averaged a 2.2% gain in May over the past 10 years, and has only ended the month negative twice during that span.
Plus, DGX seems to be a prime target for contrarian bulls, given the widespread pessimism seen on Wall Street. For one, the 5.7 million shares sold short equal more than nine times the stock's average daily trading volume, hinting at the potential for a short-squeeze situation. Plus, 13 of 18 analysts rate Quest Diagnostics Inc a "hold" or "strong sell," suggesting bullish notes from the brokerage bunch could come through. In fact, DGX stock received a price-target hike to $115 from $110 at Mizuho just yesterday.
Express Scripts Stock Could Be Due for a Rebound
ESRX stock, on the other hand, has struggled mightily, selling off after earnings yesterday due to fears of losing its top client. While the shares bottomed at a nearly four-year low of $57.80 Tuesday, they've added 3% today to trade at $61.80. Meanwhile, the shares have only closed May lower once in the past 10 years, averaging a gain of 2.4%.
It's hard to make a bullish contrarian case for Express Scripts Holding Company, given its weak long-term performance on the charts. Still, 11 of 17 analysts say ESRX stock is a "hold" or "strong sell," and short interest is also elevated. At the moment, it would take short sellers roughly two weeks to buy back their shares, based on ESRX's average daily trading volumes.