Five stocks vulnerable to September sell-off

Did you know that September is the least stressful month of the year? It's true, pension provider Friends Life says so. And to look at the FTSE 100 right now - within spitting distance of a record high - you might be inclined to agree.

But try telling that to investors in London's biggest companies. Stock market returns in September are the worst of any month in the year, and there are plenty of potential banana skins waiting to wallop share prices in the weeks ahead.

Odd, then, that the adage "Sell in May, come back on St Leger's Day" suggests pumping money back into the market on 13th September in 2014. Of course, that oft-repeated saying belongs to an age when the City's big-hitters forgot the City for the summer, heading instead for the social circuit - think cricket at Lords, the Derby and Royal Ascot in June, then Wimbledon, the Henley Regatta, Cowes week and the St Leger at Doncaster racecourse.

Yes, the money-men take a break over the summer, and lower volumes can increase volatility, but these days there's seems little reason to return to the market in September. According to The UK Stock Market Almanac, since 1982 the FTSE All-Share index has on average fallen by 1% this month. Since the year 2000, it's 1.9%!

A number of sectors do badly at this time of year, says the City Bible. Aerospace & defence, chemicals, electronics, general retailers, media and technology equipment tend to struggle. It picks out Pace, SVG Capital, Compass, Premier Farnell and Carpetright as the worst offenders.

Source: S&P Capital IQ

Only Carpetright actually outperformed the FTSE All-Share index in September 2013, and not by much. And with just a few days of this September gone, the FTSE All-Share is beating most of them again. Only Premier Farnell is ahead, although a 2.5% decline on Friday will erase that lead.

Source: S&P Capital IQ

If you're looking for winners, they're most likely to be found among the more defensive plays like electricity, food and drug retailers and pharmaceuticals that have historically done better.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.