The Right Seasonal Trade Offers Significant Profit Potential

Chris Versace
Posted: Jun 07, 2014 12:01 AM
The Right Seasonal Trade Offers Significant Profit Potential

Last week, I shared with you the importance of not only identifying cyclical and structural opportunities, but also the big profit potential to be had by investing in them. Before too long, we will be exiting the first half of 2014 and entering the second half of the year. There are many drivers in the first half of the year, including several holidays, but they pale in comparison to those in the second half of the year. We also have the back-to-school season that kicks off in late July-early August. Before too long comes Thanksgiving and the holiday shopping season. It can be a blur, which is why I’m already looking for opportunities to share with myPowerTrend Profitssubscribers.

One company that used to see a seasonal spike in its share price was tax preparation company H&R Block (HRB). As Americans collected their yearly tax forms at the beginning of the new year and needed advice on preparing their returns, H&R Block’s business would pick up and its share price would climb. It is pretty intuitive when you think about it, but that was long before the days of Intuit’s (INTU) online tax preparation software Turbo Tax.

Another group of companies that used to experience a seasonal swing in demand and subsequently their shares were the mobile phone manufacturers — Nokia (NOK), Motorola, Ericsson (ERIC), Sony (SNE) and their suppliers. It used to be you could buy these shares in late July or early August and sell them during December to net hefty double-digit percentage profits. But two key things have happened during the last few years. First, mobile phones have lost out to smartphones. Second, the mobile phone manufacturers have lost their way and most of them have exited the business. Nokia sold its device business to Microsoft (MSFT). Motorola’s was bought first by Google and has since been sold to Lenovo. Ericsson exited the handset business some time ago and now focuses solely on communications network and infrastructure equipment.

Just because those two examples have gone the way of the dinosaur doesn’t mean there aren’t any other seasonal plays to be had. In fact, over the last few weeks, I’ve rolled up my sleeves and what I’ve found is more than compelling.

Over the last five years, if you bought this particular stock during the May-June lows and sold it in the fourth quarter, you would have had an average return of 61%. The lowest return generated from that timed purchase during the last five years was in 2012 and it was 27% over the June-December time frame. The highest return was 100% in 2009. In 2013, the shares returned 65%. While past performance is not a promise of future returns, this company is benefitting from several powerful drivers, including my Always On, Always Connected PowerTrend — given the continued shift to online shopping and sales, which is accelerating due to smartphone and tablet adoption, as well as The Cash Strapped Consumer shopping for bargains.

Are you interested in a new pick that I am just sharing with myPowerTrend Profitssubscribers? Click here to learn which company this is and which shares are poised to climb between now and the end of 2014.

You Need to Think Twice When Using Facebook, Twitter & Social Media

This week, I sat down with James C. Foster, the CEO of ZeroFox, to talk about the inherent risks in social media, particularly as businesses and other institutions adopt it to reach customers, prospects and constituents. As you have no doubt noticed, this is one of the major shifts in how we communicate, share, network and stay in touch in one form or another. The list includes LinkedIn, Facebook, SnapChat, WhatsApp, Instagram, Google+, Twitter, Mention, addvocate, Sway, Grabber and many more.

As we communicate and share more through these networks, there are pitfalls that you and companies need to be wary of. It’s not just fraud and impersonation, but phishing, malware and viruses as well. I can tell you that I was re-thinking my use of social media after talking to Foster -- wait until you hear what he and his team have shared with their clients. Once you do, you’ll quickly understand why ZeroFox is growing and growing quickly.

Click Here to Listen to My One-on-One Conversation with the CEO of ZeroFox

In case you missed it, I encourage you to read myPowerTrend Briefarticle posted last week on Eagle Daily Investor about how you could make money in both cyclical and structural stocks.