BALTIMORE (Stockpickr) -- Should you sell in May and go away in 2015? Like most things involving the stock market, the answer isn't a simple yes or no.
Generally speaking, May hasn't been a great month for stocks in the last decade. On average, over the last 10 years, the big S&P 500index has lost 0.48% in May. Considering the fact that the S&P has averaged 5.7% gains over that 10-year stretch, May has historically had some pretty bad underperformance.
Must Read: Warren Buffett's Top 10 Dividend Stocks
In fact, the S&P has only been positive in three of the last 10 Mays. But not so fast.
The thing is, two of those up years for May were 2013 and 2014 -- and with 2015 correlating highly with last year's price action, we could be due for another up month this May. To stack the deck in our favor, we're turning to a fresh set of Rocket Stocks worth buying this month.
For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 297 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 81.7%.
Without further ado, here's a look at this week's Rocket Stocks.
Must Read: 5 Must-See Charts to Trade for Gains
Pfizer
Pfizer is the largest pharmaceutical firm in the world, moving about $50 billion in prescription drugs each year. A lot of Pfizer's past success comes from its effectiveness as a marketing machine -- the firm owns some of the world's best-known drugs, making household names out of Lipitor, Viagra, Celebrex and Lyrica, among others. While patent drop-offs continue to be a concern for big pharma firms, strong brand names have helped to mitigate revenue loss from patent expirations.
It hasn't stopped the revenue loss, however. PFE has seen its top line shrinking in the last several years, but that trajectory should start reversing as the late-stage therapies in Pfizer's pipeline become commercially available.
Pfizer has the wherewithal to get those new drugs to market effectively. As of this writing, PFE sports $22 billion in net cash and investments on its balance sheet, enough dry powder to handle any unexpected speed bumps along the way.
With rising analyst sentiment in shares of Pfizer this week, we're betting on this Rocket Stock.
PepsiCo
The duality of Pepsi's business has been something of a sticking point of late. Activist shareholders have fought to split the firm apart, arguing that there's value to be unlocked by breaking drinks and snacks apart. Management, for its part, hasn't agreed. Instead, it argues that the ability to cross-promote and share distribution and negotiating leverage is worth keeping PEP unified. Until we see a meaningful misstep from a performance standpoint, management is likely to keep the benefit of the doubt from investors.
Pepsi generates about half of its sales here in the U.S., a fact that the firm has been working to change as emerging markets start consuming higher snack and soda amounts per capita. Meanwhile, in PEP's core U.S. market, management has been boosting efficiency and investing in new sweetener technologies for its diet drinks. Both of those efforts could start moving the needle meaningfully in 2015.
Must Read: Warren Buffett's Top 10 Stock Buys
eBay
eBay is one of the largest electronic marketplaces in the world. The firm started off as an auction site, but it's gone on to include a variety of other transaction types, acquiring other, complementary marketplace sites in the process. That business made payments a logical side business, spurring the firm's decision to acquire PayPal in 2002. Today, though, PayPal isn't so much of a side business anymore. The payment network contributes about 45% of overall revenue, handling one out of every five dollars transacted online. The rising tide of electronic payments should continue to be an important tailwind at PayPal, and investors should expect this stock to trade for a premium once it's on its own.
Back at eBay's legacy marketplace business, the firm gets a big edge from its size. With more than 155 million active buyers registered on eBay's network, the firm has the ability to attract sales volume. After all, sellers go where the buyers are. As more of the firm's sales volume moves off of its namesake site, there's a big growth opportunity for EBAY shareholders. An increasing number of businesses making their livelihoods on EBAY's network is another important growth driver in 2015.
