25 Stocks to Own During the Summer Doldrums

The SPX's performance so far in 2019 is a good sign this summer will not disappoint

Senior Quantitative Analyst
May 29, 2019 at 6:15 AM
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Stocks are performing wonderfully this year; the S&P 500 Index (SPX) is on pace for a double-digit percent gain through May, for just the second time since 2000. We are, however, heading into the most bearish part of the year. The next three months, June through August, is the only three-month stretch to average a loss over the past 25 years. Seasonality doesn’t look to be on our side, but what if we break it down in some other ways? Also, I list some individual stocks that have tended to buck this trend. 

SPX Last 25 Years

What to Expect from the June-August Period

Generally speaking, the June through August period has been bearish for the stock market. This year has, so far, been an outstanding year, so does this mean strong momentum through May tend to carry on through the summertime?

The two tables below offer some insight. The first table looks back 25 years, and I break down the June through August returns based on the year-to-date returns through May. Looking at double-digit returns through May only yields four results, so looking at times the S&P 500 gained at least 7.5% through May, the next three months were essentially flat, with 63% of the returns positive. That's only slightly better than the typical June-August returns shown in the table above.

SPX June-Aug 25

When you look farther in history, back to 1950 when the index is up 10% or more through May, the next three months are better than at other times. Those 18 occurrences show an average three-month return for the S&P 500 of 2.42%, with 78% of the returns positive. Looking at the table below, it seems the better the market does through May, the better it tends to do over the next three summer months. 

SPX June-Aug 1950

How Stocks Have Performed in Similar Years

Here’s another interesting way to look at it. Going back to 1950, I found the January through May charts most resembled the chart this year. The four years that most resemble 2019 (at least using the method I used), are 1967, 1961, 1976 and 1991. I have the full 12-month charts for those years below. Each of those years saw strong rallies at the beginning of the year, which seem to stall after the first few months. The returns look to chop around a bit over the next few months. On the bright side, each of those four similar years all finished higher by the end of the year.

Similar Years Chart

Here’s some data on the 10 years with the most similar looking chart. The 10 years that looked most like 2019, so far averaged a gain of 9.8% for the rest of the year, with nine of the returns positive. This is promising. Other years averaged a rest-of-year gain of 4%, with 66% of the returns positive.

SPX Rest of Year 1950

Looking only at the next three months, the table below shows the index returns are nearly right in line with the typical returns. This supports what we see in the chart. Those most similar years looked to be relatively flat for the next few months, but they all ended higher for the rest of the year.

SPX Next Three Months 1950

Stocks that Buck the Summer Trend

Just because the SPX has tended to struggle over the June through August months doesn’t mean there haven’t been buying opportunities. The table below lists the 25 best S&P 500 stocks over the past 25 years, for the three months from June through August. Stocks needed at least 10 years of data to be considered. Some popular tech names, including Apple (AAPL), Microsoft (MSFT), and Google (GOOGL) made the list.

Best SPX Stocks June-Aug


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