The stockmarket in February: Three winning stocks

Historically, shares tend to be weak in January so they experience a bounce back in February.

Since 1970 the average month return of the FTSE All-Share Index in February has been 1.6%, with the month seeing positive returns in 64% of years.

But a glance at the chart below will show quite how strong the market has been in February in recent years. Since 2009 the market has been up every February, and since 1994 market has seen significant negative returns in only three years.

There's no obvious reason why the market has been so strong in recent years, although one possible explanation might be that, also in recent years, shares have been weak in January and so they experience a bounceback rally in February.

In an average February shares tend to rise strongly on the first trading day, then trade flat for a couple of weeks, before gaining strongly in the middle of the month and finally drifting off slightly to month end.

Mid-cap outperformance

A feature of February is that, with January, it is the best month for mid-cap stocks relative to the large caps. Since 2000 on average the FTSE 250 Index has outperformed the @GB:UKX:FTSE 100 Index by 1.7 percentage points in this month.

On the international front, February is one of the four months in the year that the FTSE 100 index has historically outperformed the S&P 500 Index. Since 1999 the UK index has underperformed the US index in February in only three years.

However, the outperformance is somewhat attenuated once currency is taken into account, as GBP/USD is historically weak in February.

In the last 10 years, FTSE 350 shares that tended to be strong in February are: Hunting, Provident Financial, and Anglo American. While shares that have tended to be weak in the month are: AstraZeneca, Workspace Group, and Vectura Group.

It's a busy month for analysts as there are more FTSE 100 results announced during the month than any other - 36 companies announce their prelims in February - as do 55 FTSE 250 companies.

Aside from shares, historically this has been a strong month for gold and silver.

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.