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Trading Opportunity

Persimmon with a very strong performance in August

During the month of August, it is usually a little harder to find seasonally profitable investments. With the help of our app, however, we are able to find investment opportunities for the whole year!

This month we have picked Persimmon, by market capitalization the largest construction company of the UK. It was founded by Duncan Henry Davidson in 1972, with its headquarters in York. Its name derives from the Thoroughbred racehorse Persimmon, which was owned and bred by the Prince of Wales and famously won the first royal victory since a century at the Epsom Derby in 1896.

Persimmon PLC is specialized in building exclusive homes and builds more than 16,000 a year amounting to yearly earnings of 3.42 billion British Pounds. It is listed on the FTSE 100 at the London Stock Exchange.

Below is a chart showing the typical pattern the stock exhibits during the course of a calendar year. These patterns can be discerned at a glance on a seasonal chart, which is calculated by averaging 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).

Source: Seasonax

As the chart shows, the stock hast historically performed very strongly. The stock price in 2017 is more than four times higher than in 2003. 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 July 30th and ends on September 1st.

 

Persimmon shows 86.67% Winning Trades

In the examined time-period, Persimmon shows very strong 86.67% Winning Trades, incurring losses only in 2006 and 2013. Not only the frequency is exceptional in this seasonal pattern, the annualized return of 112.23% is extraordinary as well.

The bar chart below illustrates this fact. Red bars indicate years in which negative returns were posted, green bars indicate years with positive returns.

Source: Seasonax