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Traders work on the floor of the New York Stock Exchange (SHANNON STAPLETON)
Traders work on the floor of the New York Stock Exchange (SHANNON STAPLETON)

The Street

10 U.S. stocks that avoid the September slump Add to ...

This year’s cruel summer in stocks may get worse if history serves as a guide.

The S&P 500 has recorded an average decline of 0.4 per cent in September over the past 40 years, the worst month for the benchmark index, according to Capital IQ. The Dow Jones industrial average tends to fall 1.1 per cent dating back to its beginning in 1896, says Dow Jones Indexes. That compares to an average gain of about 0.7 per cent for all other months combined.

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Yet, several stocks in the S&P 500, such as Google and Netflix, tend to outperform.

September has delivered some of the worst beatings in the past decade – as the financial crisis unfolded in 2008, when the Internet bubble kept bursting in 2002 and during the terrorist attacks in 2001.

Investors returning to the stock market after avoiding a tumultuous summer have their work cut out for them. In August, equities were crushed under the weight of a downgrade of U.S. debt by Standard & Poor’s, as well as escalating concerns over European debt. Stocks rallied at the end of August on expectations another asset-purchase plan will be unveiled by the Federal Reserve when the central bank meets Sept. 20 to discuss interest-rate policy.

With so much riding on the Fed’s next meeting, and given the historical performance of equities during September, investors are rightfully worried about the direction of stocks. As it turns out, some companies have been safer bets during September, based on historical returns in the month of September.

The following 10 stocks are the best performers on the S&P 500 in September over 10 years, according to data provided by Capital IQ. As some companies have been publicly traded for less than a decade, like Google, TheStreet is including those that have return data for at least five years. That excludes some big gainers in September like Carefusion and Mead Johnson , which have only two years of returns data for the month.

10. Nike

Company Profile: Nike is the largest seller of athletic footwear and athletic apparel in the world.

Average Return Since 2001: 6.6 per cent

Best September Performance: +17.3 per cent in 2009

Worst September Performance: -6.1 per cent in 2001

Analysts Ratings: Nike still has significant upside potential, based on analysts’ price targets. The average target price of $99.61 is about 14 per cent above current price levels. Seventeen investment research firms, from FBR Capital to Stifel Nicolaus, rate the stock a “buy.” The five other analysts covering the firm say investors should hold onto the stock.

9. Flir Systems

Company Profile: Flir Systems makes thermal-imaging systems, night vision and infrared camera systems. The company’s products are used in a variety of applications in commercial, industrial and government markets worldwide.

Average Return Since 2001: 6.8 per cent

Best September Performance: +45.5 per cent in 2001

Worst September Performance: -8.4 per cent in 2004

Analysts Ratings: Analysts are split on Flir, although none recommend that investors dump the stock. Eight research firms, including BB&T Capital and Lazard Capital, say investors should buy shares. Another nine say investors should hold onto the stock. The average price target of $32.30 represents upside of 25 per cent.

8. BlackRock

Company Profile: BlackRock is one of the country’s largest investment managers.

Average Return Since 2001: 7.1 per cent

Best September Performance: +19.9 per cent in 2010

Worst September Performance: -10.5 per cent in 2008

Analysts Ratings: Fifteen analysts, or 79 per cent of those following the stock, say BlackRock shares are a “buy.” Those firms include Credit Agricole and Wells Fargo. Another three say investors should hold onto shares, while one lone analyst says investors should sell the stock. The average price target of $217.21 means analysts expect the stock to rise an average of 31 per cent from current levels.

7. NYSE Euronext

Company Profile: NYSE Euronext owns and operates the New York Stock Exchange, Euronext and NYSE Arca. The company is set to merge with Germany’s Deutsche Borse pending regulatory approval.

Average Return Since 2006: 7.9 per cent

Best September Performance: +26.1 per cent in 2006

Worst September Performance: -2.7 per cent in 2008

Analysts Ratings: Amid the merger with Deutsche Borse, two analysts say NYSE Euronext is a “sell.” Another 12 recommend buying the stock, including Raymond James and ISI Group. The other five analysts following the stock have a “hold” rating on NYSE Euronext. The average price target of $41.64 is a whopping 52 per cent above current levels.

6. Netflix

Company Profile: Netflix streams movies and TV episodes over the Internet and sends DVDs by mail.

Average Return Since 2002: 8.1 per cent Best September Performance: +29.2 per cent in 2010 Worst September Performance: -26 per cent in 2002 Analysts Ratings: Netflix has become a favorite for investors looking for growth opportunities, but analysts are split in their view of the company. Twelve firms, including Piper Jaffray, say Netflix is a “buy,” while another 11 analysts have a “hold” rating on the stock. Seven research firms, though, have a “sell” rating on the stock, including Wedbush and Northland Securities. On average, analysts expect Netflix to rise to $273.33, which represents upside of about 17 per cent.

5. Red Hat

Company Profile: Red Hat provides open-source software services, such as Red Hat Linux, to companies.

Average Return Since 2001: 9 per cent

Best September Performance: +37.9 per cent in 2003

Worst September Performance: -28.2 per cent in 2008

Analysts Ratings: Eighteen researchers, or 72 per cent of those covering the stock, rate Red Hat a “buy,” including analysts at Wells Fargo, Citigroup, and Stifel Nicolaus. Another five analysts have a “hold” rating on the stock, while two researchers have a “sell” rating on shares. The average price target of $48.05 is about 22 per cent above current levels.

4. Google

Company Profile: Google is the iconic Internet search and advertising tech giant. The company also builds Web applications and software, including the Chrome Web browser and the Android mobile operating system for handsets and tablet computers.

Average Return Since 2004: 9.2 per cent

Best September Performance: +26.6 per cent in 2004

Worst September Performance: -13.5 per cent in 2008

Analysts Ratings: Google is massively popular with analysts, garnering 38 “buy” ratings from firms like Jefferies, Piper Jaffray and Stifel Nicolaus. The only other four analysts covering the stock say investors should hold on to shares. Google shares have underperformed the broader market, falling 10 per cent this year, but analysts on average expect the stock to climb 34 per cent from current levels.

3. Wynn Resorts

Company Profile: Wynn Resorts owns and operates three destination casino resorts: Wynn Las Vegas, Encore at Wynn Las Vegas and Wynn Macau.

Average Return Since 2003: 9.6 per cent

Best September Performance: +33.9 per cent in 2009

Worst September Performance: -14.4 per cent in 2008

Analysts Ratings: Ten researchers rate Wynn a “buy” while the other 17 covering the stock have a “hold” on the shares. Jefferies is one of the most bullish firms when it comes to Wynn with a price target of $193. The average analyst price target of $165.29 represents possible upside of 7 per cent.

2. Salesforce.com

Company Profile: Salesforce.com provides cloud computing to businesses. The company’s cloud apps offer business customers sales force automation, customer service and support solutions, social media monitoring and engagement, and other application development.

Average Return Since 2004: 9.8 per cent Best

September Performance: +26.9 per cent in 2007

Worst September Performance: -13.6 per cent in 2008

Analysts Ratings: Salesforce.com gets high praise from analysts, even though the stock has dropped about 20 per cent since mid-July. Twenty-seven firms have a “buy” rating on Salesforce.com, including BMO Capital and Canaccord Genuity. Another 10 researchers have a “hold” rating on the stock. Only two analysts say investors should sell shares. The average price target of $160.69 implies upside of 25 per cent. Sanford C. Bernstein is among the most bearish with a price target of $112, which is 12 per cent below where the stock currently trades.

1. CME Group

Company Profile: CME Group is a derivatives marketplace offering a range of benchmark futures and options products.

Average Return Since 2003: 10 per cent Best September Performance: +21.7 per cent in 2005 Worst September Performance: -2 per cent in 2003 Analysts Ratings: CME Group gets positive marks from analysts, raking in 14 “buy” ratings from firms like Jefferies and BMO Capital. Another seven analysts say investors should hold onto shares, while one analysts recommends selling the stock. The average price target of $341.12 represents potential upside of 28 per cent from current levels.

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