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As investors grapple with the mystery of underperforming stocks in January, a beacon of hope has emerged through a recent report by analysts at BMO Capital Markets. According to their U.S. Strategy Comment note, stocks that languish in January tend to shine over the subsequent months, defying the standard pattern of sluggish beginnings and gathering momentum for the rest of the year.
In the past twelve years, six out of eight Januarys with negative returns have staged impressive recoveries, setting the scene for a potentially lucrative comeback for embattled stocks, the BMO note revealed. While January may have been a desert, the oasis of the remainder of the year offers the promise of lush returns for these ailing equities, trumping the overall index returns.
Emphasizing the allure of these turnaround opportunities, the analysts stated, “Therefore, we believe it makes a lot of sense for investors to explore opportunities within these stocks, particularly at this point of the year.”
BMO did not just offer a tantalizing diagnosis; they also provided a prescription in the form of 25 S&P 500 (SP500) stocks that are currently underperforming in January month-to-date, yet holding the highest multi-factor rank based on the next twelve months price-over earnings — lower values are ranked higher — and the next twelve months EPS. What is more, all 25 stocks are rated outperform, thus fueling the contrarian theory that the darkest hour often precedes the dawn.
Without further ado, here are the 25 stocks, alphabetically listed:
- American Electric Power Company, Inc. (AEP)
- American International Group, Inc. (AIG)
- Avery Dennison Corporation (AVY)
- Bunge Global SA (BG)
- Booking Holdings Inc. (BKNG)
- Baker Hughes Company Class A (BKR)
- Boston Properties, Inc. (BXP)
- ConocoPhillips (COP)
- Corteva Inc. (CTVA)
- Dominion Energy Inc. (D)
- DuPont de Nemours, Inc. (DD)
- Dollar Tree, Inc. (DLTR)
- Devon Energy Corporation (DVN)
- EOG Resources, Inc. (EOG)
- EQT Corporation (EQT)
- Expedia Group, Inc. (EXPE)
- First Solar, Inc. (FSLR)
- Hess Corporation (HES)
- Mosaic Company (MOS)
- Morgan Stanley (MS)
- Newmont Corporation (NEM)
- Netflix, Inc. (NFLX)
- Pfizer Inc. (PFE)
- Starbucks Corporation (SBUX)
- Schlumberger N.V. (SLB)
