Best and Worst Stocks to Buy Before July

ALXN stock tends to shine in July, while AKAM shares typically struggle

Jun 25, 2018 at 2:53 PM
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We're almost to the halfway point of 2018, with July kicking off next week. As such, we decided to take a look at the best and worst stocks to own during the month, historically. Among the outperformers was drug stock Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), while the shares of cloud services provider Akamai Technologies, Inc. (NASDAQ:AKAM) could extend today's pullback into July, if past is prologue.

25 Best Stocks for July

The table below highlights the 25 best-performing S&P 500 Index (SPX) component stocks during July, courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. These standouts are sorted first by the percentage of positive returns, and then by the average return for the full three-month period. We looked at historical returns over the last 10 years, and stocks must have at least eight years' worth of data to be included here.

Best Stocks to Own in July

Alexion Pharmaceuticals stock was one of five S&P 500 components with a 100% win rate in the month of July. Of those, the equity's average monthly gain of 12.9% was the highest, putting it at the very top of our list. In fact, ALXN's average gain is second-highest on our list, and the pharma shares are also some of the best to own for all of summer.

ALXN has already added 7.3% in the month of June. The security is lower today, likely due to broad-market headwinds, last seen down 2% at $124.99. From current levels, another 12.9% pop in July would place the equity around $141.11 -- above recent resistance in the $139 region, and into territory not charted since October.

ALXN stock chart June 25

A short squeeze could propel Alexion shares even higher, if bears hit the bricks. Short interest represents four days' worth of pent-up buying demand, at ALXN's average pace of trading.

25 Stocks to Short in July

Using similar parameters that we used to identify the best stocks to own in July, below are the 25 worst stocks to own next month, historically. While Micron Technology (MU) -- which is getting destroyed today with most of the chip sector -- has the lowest win rate, Akamai Technologies stock has racked up the biggest average loss, at 6.24%. Further, AKAM has ended July higher just 30% of the time over the past 10 years.

Worst Stocks to Buy in July

AKAM shares are also down with the tech sector, last seen 2.6% lower at $78.26. The stock just last week touched a 17-year high of $83.08, and has rallied more than 50% in the past year. A 6.24% pullback from current levels would put the equity around $73.38.

AKAM stock chart june 25

A short-term pullback could shake some near-term options traders. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.48 indicates that calls more than double puts among options expiring within three months. Further, this ratio is in just the 10th percentile of its annual range, suggesting short-term traders have rarely been more call-biased in the past year.


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