3 Stocks to Keep Your Eyes on Next Month

Examining 3 stocks that have historically outperformed in May

by Alex Eppstein

Published on Apr 29, 2015 at 9:01 AM
Updated on Jun 24, 2020 at 10:16 AM

About a month ago, using data supplied by Schaeffer's Senior Quantitative Analyst Rocky White, I examined three stocks with the potential to rally in April. As we approach May, I decided to identify another trio of names to keep an eye on during the upcoming month: insurance issue Anthem Inc (NYSE:ANTM), blue chip Walt Disney Co (NYSE:DIS), and tech concern F5 Networks, Inc. (NASDAQ:FFIV).

Below, you'll find a list of 22 stocks with positive May returns at least 80% of the time over the past 10 years. Once again, the data comes courtesy of White. Under the list, you'll also find some commentary on the three aforementioned names -- ANTM, DIS, and FFIV -- and why they could be poised for another outsized move in May.

May Outperformers

Anthem Inc (NYSE:ANTM)

ANTM has put on a clinic on the charts. As of Tuesday's close at $154.22, the shares have advanced 22.7% year-to-date. Off the charts, the company just reported "a solid start to 2015" and upped its full-year earnings outlook, pointing ANTM comfortably higher in pre-market action.

If history is any indication, the health care stock could extend its run next month. In eight of the past 10 Mays, ANTM has gained -- with an average single-month pop of 3.9%, including last year's 7.6% rally.
 
Anthem Inc ANTM May Outperformance

A reversal in sentiment could further catalyze the equity's trek higher. During the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ANTM has racked up a put/call volume ratio of 3.29 -- with more than three puts bought to open for every call. What's more, this ratio ranks in the 93rd percentile of its annual range.

Also, half of the 16 analysts covering the stock consider it a "hold." This could potentially pave the way for a round of bullish brokerage attention to bolster buying power on ANTM.

Walt Disney Co (NYSE:DIS)

DIS has been tearing it up for some time, surging 16.7% year-to-date to trade at $109.92, and fresh off Monday's record high of $111.66. If past is prologue, the shares could muscle further north next month. The stock has advanced in eight of the previous 10 Mays, gaining 2.8%, on average -- and 5.9% in May 2014.

 Walt Disney Co DIS May Outperformance

However, DIS remains plagued by skepticism. Almost half of the 20 analysts tracking the equity consider it a "hold," and its consensus 12-month price target of $110.23 is just a chip-shot away from present trading levels. This could set the stage for upgrades and/or upward price-target revisions. On top of that, nearly 42 million DIS shares are sold short, which would take more than seven sessions to buy back, at typical daily volumes. In other words, the stock could be on the verge of a short-covering rally.

F5 Networks, Inc. (NASDAQ:FFIV)

Finally, FFIV has had a nice run on the charts in recent months, tacking on 15.6% since gapping down to $108.60 in late January, to close Tuesday at $125.59. In fact, the shares have almost closed that earnings-induced bear gap. If past is prologue, May could be the month in which that happens, as FFIV has advanced in eight of the past 10 years, with an average single-month pop of 6.2%.

 F5 Networks Inc FFIV May Outperformance

A capitulation among skeptical options traders could add fuel to the security's fire. FFIV's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.16 ranks above 75% of comparable readings from the last 52 weeks. Furthermore, 7.2% of the stock's float is sold short, which would take over a week to buy back, at FFIV's average pace of trading.

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