Will April Showers Bring May Flowers?

There is for instance the major Atlantic hurricane season that runs from June until the end of November.

While severe weather events will inflict major and quite costly damages on many companies, certain businesses will actually benefit from them. Shares in the companies concerned tend to rally during or shortly after the hurricane season.

One of these companies is AECOM – a US-based multinational engineering firm listed on the NYSE.

Over the past 20 years, severe hurricanes have made landfall in the US mostly in September and October. The increased demand for infrastructure-related work on the heels of the devastation can be clearly discerned in the seasonal chart of AECOM. The stock of AECOM enters a strong seasonal period from the middle of October until the end of November. Let us take a closer look at the statistics.

Seasonal Chart of AECOM over the past 13 years

(Click on image to enlarge)

Seasonal Chart of Medifast Inc over the past 15 years

Source: Seasonax - by clicking here you can highlight the above mentioned time period on the chart and take a closer look at a detailed statistical analysis of the pattern

Keep in mind that, unlike a standard price chart that simply shows stock prices over a specific time period, a seasonal chart depicts the average price pattern of a stock in the course of a calendar year, calculated over several years. The horizontal axis depicts the time of the year, while the vertical axis shows the level of the seasonal pattern (indexed to 100).

I have highlighted the strong seasonal phase from October 10 to November 25 calculated over the past 13 years. In this time span of 33 trading days, the shares of AECOM rose on average by a remarkable 11.01 percent.

Furthermore, the frequency of positive returns generated over time during this phase indicates that this seasonal pattern is consistent and highly reliable. The bar chart below depicts the return delivered by AECOM in the highlighted time period from October 10 to November 25 in every single year since 2008.

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Monica Kingsley 4 weeks ago Contributor's comment

That's right, some industries and companies are affected by various sources of seasonality apart from weather. Combining these with strong technical and fundamental analytical approach can selectively improve one's results. Knowing where the indices, sectors are going and why is the first step, taking care of the company risk and considering seasonality effects comes then.