So, we are now in the ebullient month of December and as often stated, “It is tough to put stocks away to the downside in December. It can happen, but it’s pretty rare.” In fact, there were only two years that saw negative returns for the S&P 500 (SPX/2642.22) in December. They were 1936 and 1955, but even then the declines were small.
To be sure, over the last 100 years the average December gain has been 1.55% with a “win rate” of 74% of the time (Chart 1).
Moreover, ten of the S&P’s macro sectors have experienced positive returns in December. As Bespoke Investment Group notes, “Surprisingly, it has been the high yielding dividend paying sectors that have seen the largest gains with Real Estate, Telecom Services, and Utilities all posting gains of more than 2%.” Worth mention is that last December ALL the macro sectors rallied! Parsing a list of some of the historically best performing stocks in the S&P 500 during the month of December we find the following names from the Raymond James research universe. Each stock screens well on our models and carries a favorable rating from our fundamental analysts: Broadcom (AVGO/$271.56/Strong Buy), Oracle (ORCL/$49.61/Outperform), Valero (VLO/$84.17/Outperform), Red Hat (RHT/$125.26/Outperform), Nvidia (NVDA/$197.68/Outperform), and Mohawk (MHK/$284.82/Strong Buy).