The Best Stocks to Target as the Decade Closes

Stocks tend to outperform during the second half of December

Senior Quantitative Analyst
Dec 11, 2019 at 8:00 AM
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Over the past 50 years, December has been the best month of the year for the S&P 500 Index (SPX). In the table below, you see all the gains have occurred in the second half of the month. The broad market index averages a slight loss in the first half of December, but the second half averages a gain of more than 1.5% -- with nearly 80% of the returns positive.

SPX Last 50

So, this is good news considering that we’re close to that half-way point of the month. Below, I break the second half returns down even more to fit the current-market environment. Also, I’ll list some individual stocks that have tended to do the best in the second half of the month.

Stocks in December During Bullish Years

The orange line in the chart below shows the typical December path of the S&P 500 in the month of December over the past 50 years. Notice, it bottoms right on December 15th and then steadily moves up to about 1.3%. As of now, the index is barely below breakeven for the month, so it’s not too far from what has been normal. I wondered if December looked any different in especially bullish years. The blue line shows the path when the S&P 500 was up by at least 20% already on the year heading into the final month. The path looks the same, but more exaggerated. The loss in the first half is greater, but the gain in the second half is also greater, leading to an overall return that is similar to all years.

SPX 500 Typical Path December

Here’s a table summarizing the S&P 500 returns for just the second half of the month based on the year’s return so far. I made it 15% -- rather than 20% like above -- to get more returns. Looking at the average return, the last couple weeks of the year do best when the year has been the strongest. That’s good news again for bulls. The percent positive, however, is the lowest in these instances. Essentially, though, the last two weeks of the year have historically been bullish no matter how you slice it.

SPX Second Half of December

Best & Worst Stocks to Close Out December

The table below shows the best S&P 500 stocks over the last half-month of the year. I sorted this list first by the percentage of times the stock beat the S&P 500, then by percent positive, and then by average return. Only one stock, T. Rowe Price (TROW), beat the S&P 500 Index every single year for each of the last 10 years. A lot of financial services stocks and home goods & construction stocks are on this list 

Best SPX Stocks December

The table below shows the worst stocks to have owned over the last half of December over the past 10 years. Despite the bullish overall market, these stocks have struggled during the holidays. The first three stocks in the list have failed to beat the S&P 500 in each of the last 10 years from December 15th through the end of the year.

Worst SPX Stocks December


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