Key takeaways: The January Effect, a seasonal tendency where stocks, especially smaller equities, are reputed to outperform, is approaching. Now is the time to research and buy stocks that could benefit from potential seasonal tailwinds through the best online brokers, your advisor, or a robo-advisor. Stocks from small-cap boat seller MarineMax to large-cap chipmaker Intel have pulled back this year and might rally in January. As the S&P 500 Small-Cap Stock Index (SML) underperforms the S&P 500 Large-Cap Index (SPX) by -2.49% in December as of Monday’s market close, it’s time for important stock purchase decisions as January and the ‘January Effect’ are near. Market experts say now is the time to buy stocks like Intel (INTC), Etsy (ETSY), and MarineMax (HZO) as they’re poised for rallies starting in January. If you want to diversify your portfolio with smaller capitalization companies, you can use the best stock screeners and online brokerage platforms for research.
Top Stocks to Consider Buying Before Year-End: Here are six best stocks to invest in right now according to industry experts – Intel Corporation (INTC), Walgreens Boots Alliance, Inc. (WBA), Etsy, Inc. (ETSY), Boot Barn Holdings, Inc. (BOOT), Photronics, Inc. (PLAB), and MarineMax, Inc. (HZO). Small-cap stocks aren’t the only equities worthy of consideration. Vince Stanzione, CEO and founder of financial spread betting and derivatives trading publishing business First Information, suggests looking for out-of-favor and beaten-up stocks in 2024, especially in the last quarter. Two of his ideas are large-cap stocks – Intel (INTC), down about 58% in 2024 through Dec. 16, and Walgreens Boots Alliance (WBA), also down about 57%. Both could see a good bounce in January and the first quarter of 2025 as expectations are low. WBA’s stock price soared on Dec. 10 on a report of it being in talks to sell itself to Sycamore Partners.
Small-Cap Stocks to Consider Buying Now: Smaller stocks can include mid-cap equities as well as small-cap stocks. Several mid-caps look poised for January rallies to market professionals.
As the year draws to a close, investors are on the lookout for stocks that show promise for the upcoming year. Here are six stocks to consider before year-end:
Etsy Inc., a mid-cap e-commerce marketplace operator with a market capitalization of $6.9 billion, is attracting attention. Personal finance expert and CEO of Financial Literacy Diaries, Aaliyah Kissick, finds Etsy appealing as it seems to be recovering from a downturn. Despite a yearly average decline of about 34% over the past three years and 24% over the past 12 months, shares have risen by approximately 14% in the last three months and about 24% in the last month. “Etsy’s marketplace continues to thrive with unique and handcrafted products, making it a post-holiday favorite,” Kissick said.
Boot Barn Holdings (BOOT), a mid-cap specialty retailer, is another stock Kissick favors. It has seen a 10.27% increase in the past month, following a 3.92% decline over the past three months, resulting in a year-to-date return of 93.97%. “[BOOT’s] lifestyle branding resonates with its core audience,” Kissick explained.
David Materazzi, CEO of Galileo FX, has his eye on Photronics (PLAB), a small-cap semiconductor equipment maker. Despite being down 15.52% year to date, Photronics’ shares have rallied 13.59% in the past three months. “The semiconductor world doesn’t move without photomasks, and Photronics makes them,” Materazzi said, highlighting the company’s role in the global demand for semiconductors.
MarineMax (HZO), a small-cap seller of boats and marine products, is another stock Materazzi likes. Despite a negative total return of 17.58% year to date, the stock has risen by 9.08% over the past month. “People aren’t giving up their dreams of open water,” Materazzi said, noting MarineMax’s dominance in the recreational boating market in the U.S.
When considering buying stocks that have been beaten down and are expected to benefit from a January rally, remember to avoid violating the wash rule. Wait at least 30 days before buying back the same stock or substantially similar shares in the case of funds.
Financial advisor Bob Chitrathorn, founder and vice president of Simplified Wealth Management, explains that one reason for the January Effect could be tax-loss harvesting for non-retirement accounts. People may sell off losses in December to offset taxable gains and then buy them back in January, which can help boost prices. For assistance with tax-loss harvesting, robo-advisors like Wealthfront and Betterment offer automated tools, and top online brokers such as Interactive Brokers and E*TRADE also provide tax-loss harvesting tools.
For those who prefer to search for stocks poised to jump due to the January Effect, many online brokers offer suitable screens to aid in this process.
Many standalone screens are also worth looking at. Here are some financial metrics to plug into the screen you set up:
– Stock performance: Look for stocks with a year-to-date total return down 40% or more, as per Stanzione.
– Market capitalization: The January Effect supposedly helps small-cap stocks more than large-caps slightly. But Stanzione thinks large caps are safer. ‘Stay with larger cap stocks if bottom fishing as you don’t want companies that may be delisted.’ Share price or market cap falling below a specified level for a certain number of days can trigger delisting.
– Dividend: Stocks paying dividends indicate financial health, according to Stanzione.
– Earnings per share (EPS) growth: Materrazi says look for EPS growth above 10% over the trailing 12 months to separate winners from pretenders.
– Return on equity: Materazzi recommends looking for a return on equity over 15% in at least the two most recent years, showing the company can turn shareholder money into profits.
– Debt-to-equity ratio: A ratio below 1 shows the company isn’t drowning in obligations, as per Materazzi.
– Profit, not loss: Don’t confuse a 2024 share price decline with an unprofitable year. Seek profitable companies whose shares have pulled back. ‘A pullback on a profitable company is like a clearance sale on a great product: a chance to buy more,’ said Materrazi.
Compare the Best Online Brokers:
– Fidelity Investments: $0.00 minimum deposit, $0.00 stock trading fee, offers ESG/SRI, Stocks, ETF’s, Mutual Funds, Fixed Income.
– Charles Schwab: $0.00 minimum deposit, $0.00 stock trading fee, offers ESG, Stocks, ETFs, Options,, Mutual Funds, Fixed Income.
– Interactive Brokers: $0.00 minimum deposit, $0.00 stock trading fee, offers ESG/SRI, Stocks, ETFs, Options, Mutual funds, Fixed income.
– tastytrade: $0.00 minimum deposit, $0.00 stock trading fee, offers ESG/SRI, Stocks, ETFs, Options, Crypto.
– E*TRADE: $0.00 minimum deposit, $0.00 stock trading fee, offers ESG/SRI, Stocks, ETFs, Options, Mutual Funds, Fixed Income, Crypto.
– eToro: Minimum deposit varies, $0.00 stock trading fee, offers ESG/SRI, Stocks, ETFs, Crypto.
Compare the Best Stock Screeners:
– Trade Ideas: Starts at $254 per month, has a free version available, features AI-driven stock screener.
– FINVIZ: Starts at $39.50 per month, has a free version available, has vivid graphics and interactive charts.
– Zacks: Free version available. Premium plan $249 per year, offers a massive number of metrics.
– Stock Rover: Starts at $7.99 per month, has a free version available, has a stock rating system.
– TC2000: Starts at $9.99 per month, no free version, has powerful screening tools.
– TradingView: Starts at $14.95 per month, has a free version available, follows 70+ global exchanges.
How We Selected the Top-Ranked Brokers: Providing readers with unbiased, comprehensive reviews of online brokers and trading platforms is a top priority . We combined industry research, subject matter expertise, and investor survey data to guide the research and weightings for our 2024 online broker awards. To collect the data, we sent a digital survey with 110 questions to each of the 26 companies in our rubric.
Our team of researchers meticulously verified survey responses and sought out any missing data points by engaging in online research and direct conversations with each company. This comprehensive data collection process took place from February 19th to March 19th, 2024.
To determine the best online brokers and trading platforms, we developed a proprietary model that scored each company across 11 major categories and 89 criteria. The score for each company’s overall star rating is a weighted average of the criteria in the following categories:
– Trading Technology: 11%
– Trade Experience: 10%
– Security: 5%
– Research Amenities: 13%
– Range of Offerings: 11%
– Portfolio Analysis and Reports: 9%
– Mobile App Usability: 9%
– Educational Material: 9%
– Customer Service: 7%
– Costs: 10%
– Account Amenities: 6%
How We Selected the Top-Ranked Stock Screeners:
Our initial search identified 30 stock screeners for consideration. We then narrowed this list to 16 by applying our criteria of ease of use, selection of fundamental and technical filters, depth of filter criteria, customization, and extra functionality. After a more rigorous comparison, we identified the best stock screeners in six distinct categories.