I’m Banking on 2 Stocks to Climb This Fall

We are creatures of habit. As it turns out, the market is no different. Charts show numerous repeating patterns. This is why investors use the expression “go away in May,” as the market tends to pull back over the summer, just as it did this year for many stocks. The market also tends to rally in the fall. Investors looking to put more cash to work might benefit from looking at the following list. All are dividend payers from the financial sector and have been compiled by looking at historic market leaders for October and November.

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)

Investors have historically done well with CIBC in October, November, and December, with monthly returns between 1.5% and 2%. Seasonal trends suggest that fall is the best time to buy CIBC, although March is the single best monthly return for this stock.

Toronto-Dominion Bank (TSX:TD)(NYSE:TD)

Like CIBC, Toronto-Dominion tends to run in the fall with consecutive monthly increases from August to December. Currently, momentum is good for Toronto-Dominion because this stock just passed the 200-day simple moving average at $66 per share. At current levels, the question is whether or not this stock will break above the 52-week high around $71 per share.

Royal Bank of Canada (TSX:RY)(NYSE:RY)

RBC typically has its best months in February and October. There is no clear good time to buy RBC, but, conversely, there is no bad month for RBC either. This stock is remarkably dependable, which explains why it is often a favourite among investors. For any given month, the RBC stock price rises between 4.4% and 6.5%. Of course, RBC will have bad months, but, on average, this stock goes up 60% of the time and down only 40% for any given month.

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS)

BNS has historically seen multi-month runs that start in February, similarly to RBC, and end in July. If you are looking to time this stock, then it might be best to wait until winter.

Fairfax Financial Holdings Ltd.  (TSX:FFH)

This stock price has increased in seven of the last nine years in October and November. Fairfax pays a smaller dividend, 2.05%, compared to the other financials listed here. It is also currently low on earnings due to capital losses in the last two years. So, it may not be as dependable as the major banks.

Bottom line

Past performance is not an indication of future trends. But charts tend to show seasonal patterns. The TSX financial sector tends to have an upswing at the end of the calendar year. Picking from the list above may help round out your portfolio. Riding the seasonal trend would be a bonus to get these investments starting off on the right foot.

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*returns as of 5/30/17

Fool contributor Brad Macintosh has no position in any stocks mentioned. Fairfax is a recommendation of Stock Advisor Canada.

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