October is infamous for "jinxing" investors with massive drops — the last thing anyone wants following September's fall. But some S&P 500 stocks also have a knack for avoiding the pain.
Ten stocks in the S&P 500 including tech play Teradyne, Elevance Health and NextEra Energy, outperformed the S&P 500 every October over the past five years, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. And during the period, all the stocks gained an average of anywhere from 2.7% to more than 10%.
There's nothing weary investors would like more than a rally to end the pain from September, which appears to have lived up to its reputation as one of the worst months of the year for stocks.
"It is fitting that the S&P 500 index finishes the month and quarter near its lows," said Edward Moya of Oanda. "Since the middle of August it has mostly been a one-way move lower with the exception of a bounce that came from the hope of a Fed pivot."
What October Usually Brings For The S&P 500
Investors have a love-hate relationship with October.
On one hand, it's the "jinx month." The month has hosted some of the largest crashes in market history, says "Stock Trader's Almanac." October was the month of the 1929 and 1987 mega crashes. But it's also the month of the 554-point plunge on Oct. 27, 1997, big drops in 1978 and 1979 and the 2008 plunge, the almanac says.
But there's an important bright side to October, too, that's especially hopeful now. October is also known as the "bear killer" month. Bear markets ended in October in 12 bear markets since World War II, including in 1946, 1957, 1960, 1966, 1974, 1987, 1990, 1998, 2001, 2002 and 2011, the almanac says.
All that means October ends up being a dramatic month where, in the end, most investors' portfolios ended up around where they started. The S&P 500 gained just 0.8% in October, on average, since 1950. That ranks it seventh among all the months for gains, the almanac says.
And recently, October gains have been smaller still. The S&P 500 rose just 0.3%, on average, in the past five months of October. It's important to note, though, the S&P 500 jumped 6.9% in October 2021, its best showing during the month in years.
But you can still find S&P 500 stocks that do much better than that.
Stocks That Beat The S&P 500 Every October
When it comes to a stock that shines in October, well-run Teradyne is on the top of the list. The maker of equipment used to make and test semiconductors topped the S&P 500 each of the past five Octobers. And of the October-beating stocks, Teradyne delivered an average gain of 10.2% during the month. That's more than any other stocks in the index.
Much of Teradyne's performance in October will hinge on its third-quarter results to be reported on Oct. 24. Analysts think the company will earn $1.04 a share, down by more than 34% from the same year-ago period. But it's important to note Teradyne has a long track record of exceeding analysts' profit forecasts. It's topped estimates in at least five of the past quarters. It earned $1.21 a share in the June quarter, topping estimates by more than 6%.
NextEra Never Fails In October
Another interesting S&P 500 stock in October is power seller NextEra Energy. It generates electricity using solar, nuclear, coal and natural gas.
What's interesting about the stock, though, is that it charges through the month of October as most other stocks flounder. NextEra is the only S&P 500 stock to not only beat the S&P 500 every October the past five years. But it's never even fallen during the month in that time. That includes October 2018, when the S&P 500 fell 6.9% in October. During that month, NextEra rose 2.9% instead.
The company is expected to report quarterly profit on Oct. 21. Analysts think it will earn 79 cents a share in the period, up more than 5%.
To be sure, there's no guarantee this October will shake out like those in the past. But one thing's for sure: S&P 500 sure don't want a repeat of September.
Top S&P 500 Stocks In October
All topped the S&P 500 in each of the past five months of October
| Company Name | Symbol | Average gain in October | Sector |
|---|---|---|---|
| Teradyne | 10.2% | Information Technology | |
| Elevance Health | 8.2 | Health Care | |
| UnitedHealth Group | 7.5 | Health Care | |
| PPG Industries | 5.5 | Materials | |
| NextEra Energy | 5.0 | Utilities | |
| Nucor | 4.4 | Materials | |
| Copart | 4.1 | Industrials | |
| Thermo Fisher Scientific | 4.0 | Health Care | |
| Bank of America | 3.9 | Financials | |
| Dover | 2.7 | Industrials |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
