McDonald’s Corporation (MCD), Cisco Systems, Inc. (CSCO), Johnson & Johnson (JNJ): Should You Sell in May and Go Away?

Page 1 of 2

As the calendar turns toward the second quarter of the year, it’s again time to revisit the popular investing adage, “Sell in May and go away.” As the theory stipulates, investors should get rid of their stocks and head for the safety of cash, so as to avoid the market’s seemingly inevitable spring swoon.

Over the past few years, the theory held true. In May 2010, the S&P 500 Index lost 4% during the month. Similar declines, of 3% and 6%, occurred in May 2011 and May 2012, respectively. This pattern has only added fuel to the fire of what is, in truth, a seriously flawed idea.

Don’t sell these stocks in May (or any other month)

Of course, even though the month of May has happened to be a poor one for the market, that doesn’t mean that stocks are an automatic sell once the calendar hits the fifth month. If investing were really that easy, we’d all be millionaires. Remember that correlation doesn’t necessarily mean causation.

The truth is that the declines seen in May over the past few years belie what has been a remarkable rally since the Great Recession. No matter the month, the market offers some of America’s best, most profitable blue chips stocks that should be bought and held.

McDonald's Corporation (NYSE:MCD)

Three Dow components to buck the trend

Fast food giant McDonald’s Corporation (NYSE:MCD) carries a spectacular business that rewards investors every month of the year. The company reported great full-year 2012 results, as global comparable sales increased 3.1%, and consolidated revenues climbed 5% on a constant currency basis. Diluted earnings per share increased 5% as well on a constant currency basis to $5.36 per share.

Furthermore, the company’s future is bright. McDonald’s Corporation (NYSE:MCD) has set ambitious goals for international expansion. McDonald’s Corporation (NYSE:MCD) is executing on its plan to open 225 to 250 new restaurants every year in China until it reaches its stated goal of 2,000 restaurants there by the end of this year.

Technology giant Cisco Systems, Inc. (NASDAQ:CSCO) recently provided investors with an impressive 21% dividend increase, reflecting management’s strong belief in the company’s future.  The company has increased its payout three times since instituting its dividend program in 2011.

Moreover, Cisco Systems, Inc. (NASDAQ:CSCO) trades for an attractive valuation well below that of the broader market, exchanging hands for 12 times trailing earnings versus the trailing P/E ratio on the S&P 500 that is in the mid-teens.

Last but not least, health care mega-cap Johnson & Johnson (NYSE:JNJ) is a $215 billion company with a diversified business line of medical devices, pharmaceutical medicines, and consumer products. It has a wide variety of well-known consumer products including Band-Aids and Listerine.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!