August Is Actually A Great Month If You Own These 8 Stocks

August is feared as one of the worst months for the S&P 500 — and for good reason. But investors still find ways to make big money.




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Eight stocks in the S&P 500, mostly tech and communications services firms like Nvidia (NVDA), IBD Long-Term Leader Microsoft (MSFT) and Twitter (TWTR), are complete standouts in the S&P 500 in August, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

All these stocks not only topped the S&P 500 in August in each of the past five years. They also all posted average gains in the month of 4% or more.

And that qualifies as a good August — which for most people ranks among the very worst months of the year.

August Is Usually Tough For The S&P 500

Going back to 1950, the S&P 500 slipped 0.2% in August on average, says Stock Trader’s Almanac. That ranks August as the eleventh-worst month of the year for the index.

And underperformance in August isn’t a fluke. It can sometimes come in dead last.

“August is the worst … S&P 500 month during 1988 through 2020,” says Stock Trader’s Almanac. “In post-election years since 1950, August is still ranked no higher than #11 while average performance slips deeper into negative territory.”

More recently, though, August spared S&P 500 investors some of the pain.

Last August, for instance, the S&P 500 vaulted 7% higher during the month. It was at that time investors began to anticipate the reopening of the economy. But in just the prior August of 2019, the S&P 500 slipped 1.8%.

But not all S&P 500 stocks suffer in August.

Technology Is The S&P 500 Place To Be In August

Just one S&P 500 sector routinely skates through August. And it’s technology.

The Technology Select Sector SPDR (XLK) is the only sector out of the 11 that topped the S&P 500 in each of the past five years. And during August the past five years, the tech sector gained 4.2% on average. That’s a particularly strong showing if you consider the S&P 50o only rose 1.6% on average in August going back to 2016.

And it’s not just the overall S&P 500 tech sector that outperforms in August. Drilling down into the individual tech stock winners tells the same story. Six out of the eight top performing S&P 500 stocks in August hail from the tech sector.

Take the No. 1 performer in the month: high-end computer chip maker Nvidia. It topped the S&P 500 during August in each of the past five years. But it’s also put up an average gain in the month of 10.3%. All eyes are on whether Nvidia can pull it off again. Shares are already up nearly 50% this year.

Analysts are looking for the company in August to report 53% lower adjusted second-quarter profit of $1.02 share. But Nvidia has a knack at overdelivering. Profit in the first-quarter topped expectations by more than 350%. Should you buy Nvidia stock now?

Another big tech winner in August is Microsoft. The software giant’s shares pushed 4.3% higher in August, on average, the past five years.

Get Ready For August S&P 500 Surprises

August is only starting, and already investors are coming off some surprises. Expect more.

Take Twitter for instance. It, too, is a strong August performer. It’s risen more than 8.5% in August, on average, in the past five years. Shares are already up 28.6% this year. Why? The communications firm reported, in July, a profit of 20 cents a share. That demolished expectations by more than 185%. That ranks as one of the top surprises in an already robust second-quarter profit reporting season.

So, yes, August isn’t usually great for the S&P 500. But you can still find winners if you pick your spots in this tricky month.

Top S&P 500 Stocks In August

All topped the index in each August for at least past five years

Company Ticker Average % ch. in August YTD % ch. Sector Composite Rating
Nvidia (NVDA) 10.3% 49.4% Information Technology 99
Synopsys (SNPS) 9.3 11.1 Information Technology 85
Twitter (TWTR) 8.6 28.8 Communication Services 92
Mastercard (MA) 6.8 8.1 Information Technology 85
Visa (V) 5.6 12.6 Information Technology 86
Intuit (INTU) 5.5 39.5 Information Technology 93
Cintas (CTAS) 5.1 11.5 Industrials 89
Microsoft (MSFT) 4.3 28.1 Information Technology 96
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz

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