Monthly Trading Picks

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Trading Opportunity

Adidas’ stock exhibits excellent investment opportunities in March and April

This time we have picked Adidas, the well-known global manufacturer of sporting goods based in Herzogenaurauch, Germany. It is the biggest sportswear company in Europe and the second biggest in the world. Even if you are not into sports at all, you have likely been in contact with this brand in your life.

Below is a chart showing the typical pattern the stock exhibits in the course of a calendar year.  These patterns can be discerned at a glance on a seasonal chart, which is calculated by averaging the performance of the stock over the past 15 years. The horizontal axis depicts the time of the year, the vertical axis the level of the seasonal pattern (indexed to 100).

As the chart shows, the stock has historically performed very strongly. The stock price in 2017 is more than seven times higher than in 2004. However, there is still an opportunity to pick out a time of the year that has shown stronger growth than the year-round average. The time period associated with the strongest seasonal performance is highlighted on the chart in blue. It begins on March 7th and ends on April 26th.  

How frequent were rallies in Adidas during the seasonally strong period? After all, it is theoretically possible that  an outstanding gain achieved in just one or two years was responsible for generating this strong average performance.

 

Adidas rose in 13 out of 14 cases

The bar chart below depicts the percentage returns generated by Adidas shares over the relevant time period from March 7 to April 26 in every year since 2004. Red bars indicate years in which negative returns were posted, green bars indicate years with positive returns.