Seasonal securities:Summer stocks – just a summer dream?
by Klaus Weber
There are companies that make a large part of their profits in the summer. Can you take advantage of this as an investor? An overview of what you should look out for.
Also stable in summer: share prices on the Frankfurt Stock Exchange.
Source: plainpicture
There is an old stock market saying: “Sell in May and go away.” This means that you should sell your shares in May so that you can then go on a long, relaxing vacation. Ideally for around three months.
The rule continues: “Remember to come back in September”. So, in September at the earliest, you can slowly start studying the share price trends and profit prospects of companies again.
Statistically, the summer is worse on the stock market
Statistically speaking, it is true that share prices do better in other months. The conclusion that you shouldn’t invest at all in the summer is completely wrong. As is the case with statistics, they are often not accurate. Investors on the German stock market remain in record mood. The German leading index gained 0.5 percent on Tuesday and marked a new all-time high of 17,507.470 points. “The prospect of interest rates falling again is driving the DAX up,” said Frank Bethmann.02/28/2024 | 2:03 min
Firstly, in many years, prices have also done well in the summer months. And secondly, there are of course always buying opportunities – statistics or not. Some even claim that there are good opportunities in the summer because stocks are seasonal.
And of course, many companies do their main business in or with the summer. Just think of the large listed rental car companies like Sixt or the Avis Budget Group. Last summer, for example, Sixt made more sales than ever before in its company history due to the great desire to travel.
But it’s not just the rental car industry that makes big sales in the summer. This also applies to airlines and soft drink manufacturers. But does higher demand in the summer automatically mean that companies’ share prices also rise?
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How does seasonality affect the stock market?
Seasonax, a company specializing in the seasonality of stocks, found that this is indeed true for the beverage giants Coca-Cola and PepsiCo. Their share prices increase in the warmer seasons. PepsiCo’s share price has even risen consistently in the summer over the past ten years.
However, anyone who assumes that this is a regular occurrence for all companies that make good money at this time of year is on the wrong track. There are no automatisms on the stock market. Seasonax also found, for example, that neither Delta Airlines nor the cruise company Norwegian Cruise Line have reached summer highs.
This means that seasonality does exist, but it is not a given. The weather plays a major role in many so-called summer stocks. In addition, companies that generate a lot of sales in the summer do not operate in a vacuum.
Rental car companies, for example, have to renew large parts of their fleets despite record revenues so that they can operate in a climate-friendly manner. This means that high investments are necessary, which in turn reduces profits.
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Investors must check carefully
Investors still need to be interested in economic and business prospects or balance sheets. In addition, so-called “procyclical” investing is very risky. You are swimming with a wave. And like on the beach, it breaks very quickly – when the professionals get out.
Jürgen Molnar, capital market expert at Robomarkets, says: “There are no summer or winter stocks. The most important thing on the stock market is to have the right timing. And that is difficult enough.” He gives the following advice:
Buy stocks whose business model you understand and which are seasonally independent of weather and temperatures.
Jürgen Molnar, Robomarkets
Anyone who still wants to invest in summer stocks should get comprehensive information and be absolutely convinced of their investment – otherwise, a severe autumn depression could follow the summer.
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