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Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Is October the Month for Technology Stocks?

Companies / Tech Stocks Oct 20, 2014 - 05:26 PM GMT

By: Investment_U

Companies

David Becker writes: Technology stocks generally perform well in October as investors begin to focus on third quarter earnings. While the group as a whole has outperformed the broader markets, there are a number of both software and hardware companies that have experienced stellar performance.

One way to measure the performance of a sector or a specific stock is to analyze its seasonality. Seasonality can be defined as regular changes that occur to a stock or sector every calendar year. For example, if the price of a stock climbs every October then it has a seasonal pattern.


The Technology SPDR ETF (NYSE: XLK) shows a predictable seasonal return in October. And 73% of the time over the past 15 years, the SPDR technology ETF has climbed an average of 3% in October. The results are similar for the broader Nasdaq 100. The PowerShares QQQ Trust (Nasdaq: QQQ) has increased an average of 3.7% in October over the past 16 years, producing an average return of 3.7%.

Technology stocks have outperformed the broader markets recently too. Over the past 10 years, the S&P 500 index was up by 0.4% 55% of the time. Over the past 20 years, the large cap index was higher 60% of the time, for an average return of 1.5%.

Within the tech sector, there are a number of stocks that show strong seasonal patterns. Over the past 20 years, Apple’s (Nasdaq: AAPL) share price increased 70% of the time for an average return of 6.7%. Apple has performed even better in October during the past 10 years, climbing an average of 8.9% nearly 80% of the time.

Microsoft Corp. (Nasdaq: MSFT) has also been a great stock to own during past Octobers. Over the past 20 years, the stock price climbed 75% of the time for an average return of 5.6%. The returns over the past 10 years are similar as 70% of the time the stock is up by an average of 4.4%.

Google’s (Nasdaq: GOOG) returns also shows a robust seasonal pattern. The stock price has increased by a staggering 14% in eight out of the past 10 years.

On the hardware side, Intel (Nasdaq: INTC) has produced very impressive returns in October over the past 20 years. The stock was higher 80% of the time and showed an average return on its stock price of 5.9%. The past 10 years have not been as kind as Intel was up only 70% of the time, reflecting an average return of 2.1%. Not all chip companies have experienced positive performances in October. Advanced Micro Devices (NYSE: AMD) has only increased in value 40% of the time in October and its average return is slightly less than 2%.

Source: http://www.investmentu.com/article/detail/40423/seasonality-technology-stocks#.VEVhHE10y0k

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