Looking for the top stocks to invest in this May? Look no further than the S&P 500, which has a few gems that are worth staying invested in. Despite May being traditionally viewed as a disappointing month for most S&P 500 stocks, there are thirteen stocks that have made it very profitable for investors to stay in the market. This analysis of data from S&P Global Market Intelligence and MarketSmith highlights companies like Take-Two Interactive Software (TTWO), EPAM Systems (EPAM), and Generac Holdings (GNRC) which have all outperformed the S&P 500 in May over the past five years and have posted average gains of 2% or more.
It’s important to note that the idea of “selling in May and going away” is a widely cited stock-market cliche that is often overused and not necessarily backed up by data. Historical trends do show that May kicks off a traditionally weak period for stocks, with the month itself being the S&P 500’s fifth-worst month of the year. However, this is only one part of the story.
Recent data from “The Stock Trader’s Almanac” shows that sector rotation makes more sense than bailing out of the market altogether. Defensive consumer staples and healthcare sectors tend to perform better in May through October, while consumer discretionary, industrials, materials, and tech sectors perform better from November through April.
This year, the economy is showing some positive trends that are worth noting. The US Bureau of Labor Statistics reported an unemployment rate of 4.2% in April, the lowest it’s been since December 1969. Additionally, the Institute for Supply Management’s purchasing managers’ index (PMI) increased to 64.7% in April, marking its 12th consecutive month of expansion. The PMI measures the economic activity in the manufacturing sector and is a key indicator of economic health.
Moreover, the Biden administration’s infrastructure plan has been making headway in Congress, with the Senate passing a $1.2 trillion package focused on traditional infrastructure like roads, bridges, and broadband. If passed, this bill has the potential to boost the economy and create jobs.
In conclusion, it’s important not to get too caught up in stock market cliches like “selling in May and going away.” There are certainly stocks worth staying invested in during this traditionally weak period, and sector rotation can help mitigate any potential losses. Additionally, recent positive economic trends, including low unemployment rates and expansion in the manufacturing sector, bode well for the overall health of the US economy.
