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Examining 3 stocks that have historically outperformed in March
About this time last month, with the help of Schaeffer's Senior Quantitative Analyst Rocky White, I decided to look at three stocks with the potential to run higher in February. Currently, the three names we highlighted -- Agrium Inc. (USA) (NYSE:AGU), Dick's Sporting Goods Inc (NYSE:DKS), and Smith & Wesson Holding Corp (NASDAQ:SWHC) -- are on pace to finish February with respective gains of 7.3%, 6.2%, and 11.4%.
Therefore, I thought it would be helpful to repeat the exercise, this time for March. White again furnished me with a list of historic outperformers -- 41 stocks that have advanced at least 90% of the time over the past 10 Marches. In the chart immediately below, you'll find the fruit of his labors.
But let's take a closer look. At Schaeffer's, we look for contrarian plays -- that is, stocks that combine solid technicals with negative sentiment, potentially paving the way for outsized gains as skeptics capitulate. On the above list, three names that stand out are Anthem Inc (NYSE:ANTM), GameStop Corp. (NYSE:GME), and 3M Co (NYSE:MMM).
Anthem Inc (NYSE:ANTM)
ANTM is the last stock on the chart above, but its performance is nothing to sneeze at. The security has been positive in nine of the last 10 Marches, and it sports an average monthly gain of 1.9%. Looking at the equity's year-by-year performance below, however, it's clear the average gain is weighed down by one bad month. Remove March 2008, and the average swells to 6.2%.
Looking at ANTM's more recent performance provides additional reasons for optimism. On a year-over-year basis, the shares have advanced 64.3% to trade at $146.72. What's more, earlier this week, the health insurance stock hit a record high of $148.76.
Nevertheless, the brokerage bunch has yet to hop on the ANTM bandwagon. Eleven out of the 19 covering analysts rate the stock a "hold," and its consensus 12-month price target of $152.11 is just a chip-shot away from current trading levels. This could pave the way for a round of upgrades and/or price-target hikes to fuel additional gains.
GameStop Corp. (NYSE:GME)
GME has also consistently outperformed in March, advancing nine of the last 10 times. Its typical monthly advance is an even more impressive 14%, and as the table below indicates, the stock has tacked on more than 20% in March three times in the last decade. More recently, GME can be found sitting on a year-to-date lead of nearly 10%, closing Thursday at $37.03.
If this upcoming March shakes out as it has in the past, GME could benefit from a colossal short-covering rally. More than 45% of the equity's float is sold short, and it would take 28 sessions to buy back these bearish bets, at average daily trading volumes.
3M Co (NYSE:MMM)
MMM has been even more consistent than the two previous stocks, rallying in each of the past 10 Marches. On average, the shares have advanced 2.9% during the month. Meanwhile, the security is fresh off a record high of $169.98, closing Thursday at $169.61.
There's still plenty of doubt harbored among the brokerage crowd, however. Eight of the 14 analysts tracking MMM have doled out "hold" or worse opinions. What's more, the equity's average 12-month price target of $168.73 stands at a discount to current trading levels. In other words, MMM could soon benefit from a round of bullish brokerage notes.