“You can’t time the market” is an expression often extolled by investing experts — because it is largely true. However, you can help your odds by buying stocks at favourable times. For example, many companies & sectors are cyclical or seasonal.
Recessions are examples of profound cycles and strong drivers of market shifts. But again some companies — such as consumer staples — are more recession-proof (because you always need to eat and buy toothpaste).
The list below shows different TSX stocks that show (or don’t show) a seasonal pattern. At the top of the list is the Vanguard S&P 500 ETF (TSX: VFV). Did you know that December and January are typically the two best months to own this S&P 500 index fund? The average monthly returns are 4.2% and 3.6%. How about individual TSX companies?
| Symbol | Best Month | Best Month Return | 2nd-Best Month | 2nd-Best Month Return |
| TSX:VFV | December | 4.20% | January | 3.60% |
| TSX:ADN | March | 4.40% | February | 3.10% |
| TSX:CVE | November | 2.20% | June | 2.10% |
| TSX:GC | August | 8.40% | April | 5.00% |
| TSX:L | May | 3.10% | December | 3.20% |
| TSX:MRU | May | 3.60% | December | 3.60% |
Source: Yahoo Finance
Seasonal stocks starting now
Acadian Timber Corp. (TSX: ADN) maintains and runs 2.4 million timber acres in New Brunswick and Maine. It is a small-cap company that pays a hefty dividend (5.86%) with a payout ratio currently in the 80s%. February and March are the best-performing months for this stock. History suggests buying the stock in January is a good idea. The company reported two consecutive quarters where earnings were double estimates.
Great Canadian Gaming Corp. (TSX:GC) also shows a strong seasonal pattern, with August and April as best-performing months. It is ideal to buy this gaming and entertainment growth stock in January. This stock is down 13% in three months. Enterprise value/EBITDA is an often-used valuation metric, and it is currently under 10 for Great Canadian — a low value is desirable for this metric. Anything under 12 is considered solid value. Looking ahead, another positive sign is that earnings are expected to increase by 14% from 2017 to 2018.
Loblaw Companies Limited (TSX: L) and Metro, Inc. (TSX: MRU) are consumer staples stocks. With the holiday season around the corner, these companies will see more traffic, leading to strong earnings Q1 & Q2 of 2018. Indeed, May is typically the best-performing months for these stocks. I wouldn’t buy these companies for one quarter, though, for a quick buck. They are actually quite dependable investments. Both continue to be heavily discounted in 2017, so you could pick either at this point.
Canadian oil sands company Cenovus Energy Inc. (TSX: CVE)(NYSE: CVE) does not have a seasonal pattern like the others on this list. Buying Cenovus in January would historically be a bad investment if seasonality was your game. Cenovus has trended down since 2011. The secular move has been evolving slowly. Now, Cenovus is steadily climbing back from its bottom, which was $8.92 back in July.
