Acid test: Seasonality and sustainability go well together | Markets | 01/13/2021


The economy has undoubtedly had a tough roller coaster ride. So many have been waiting for 2021 to hit the restart button. Of course, the current situation is not going to do a sudden U-turn, but at least there is light at the end of the tunnel in the form of a vaccine.

The Seasonax founders and managing directors from left to right: Head Analyst Dimitri Speck, Tea Muratovic and Christoph Zenk

© Seasonax Capital

In addition to the light at the end of the coron tunnel in the form of the vaccine, the topics of “sustainability” and “green economy”, which have been on the radar of the investment boutique Seasionax Capital, which specializes in the use of seasonal patterns, are also moving. Tea Muratovic, co-founder and CEO of Seasonax Capital, said: “In 2020, topics such as health care and self-care have moved into focus. The change in behavior has given so-called“ stay-at-home ”stocks a boost, as have companies from the Sports, clean eating, clean beauty products and renewable energies. ”

Green and clean
The green economy and clean economy, also in the personal lifestyle, accompany citizens today in many areas of life. In the financial sector, clean revenues are generated through interest income on renewable energy loans. In the consumer discretionary sector, Tesla is definitely a leader in electromobility and energy-efficient products. In the consumer staples sector, clean sales are generated from organic cosmetics and personal care products. 85 percent of Alphabet’s total sales are clean income. One thing is clear – the green economy is an alternative vision for growth and development – and that is not going to change anytime soon. In order to be able to keep up in the coming years, companies must make even more use of sustainable resources than before. Some are already well on their way, while others are still far behind.

Seasonality and sustainability actually go well together
Seasonality is defined as a recurring pattern that is the result of repetitive market or corporate events. Sustainability can increase the impact of these events on the individual company level. When analyzing seasonality, one can therefore definitely look for the sustainability factor as an additional portfolio parameter
use. The companies Muratovic analyzed have taken significant steps to contribute to a green economy and made it onto Forbes’ sustainability list this year.

In contrast to a standard chart, which simply shows stock prices over a certain period of time, a seasonal chart illustrates the average price development of a stock over the course of a calendar year, calculated over several years. The horizontal axis shows the point in time of the year, while the vertical axis shows the level of the seasonal pattern (indexed to 100).

First example Unilever
Unilever plc, together with its Dutch sister company Unilever NV, is one of the world’s leading giants in the areas of food, personal care and
Household products. The huge range of consumer goods in the Group’s portfolio includes more than a dozen global brands. Unilever stock has had a strong seasonal phase in the first half of the year.

Seasonal Unilever chart calculated over the past ten years
Unilever typically has strong seasonal returns in the first half of the year. This is immediately visible in the seasonality chart.

The strong seasonal phase lasts from January 13th to June 3rd, calculated over the last ten years. During this period of 100 trading days, Unilever’s shares rose by an average of 11.47 percent. In addition, the number of times positive yields have been achieved over time at this stage shows that the seasonal pattern is highly consistent and reliable.

What: Seasonax

The following bar chart visualizes the earnings of the Unilever share in the relevant period from December 19 to February 24 in every year since 2010. Blue bars indicate years with positive earnings.

Seasonal pattern yield every year since 2010

What: Seasonax

Example number two is L’Oréal
Another company whose seasonality correlates positively with that of Unilever is the global cosmetics manufacturer L’Oréal. L’Oréal has also seen a strong seasonal phase in the first six months of the year over the past decade, from January 14th to May 28th, to be precise.

Seasonal chart from L’Oréal, calculated over the last ten years

What: Seasonax

Short term seasonality for example number three: Autodesk
Autodesk is an idea for short-term oriented traders. This is a company that made it into the top five of Forbes’ sustainability list this year. Autodesk is a leading provider of computer-aided design software and offers a broad portfolio of 3D computer-aided design (CAD) applications and tools.

Autodesk seasonal chart calculated over the past ten years
The strong seasonal phase from January 15th to February 19th is marked in the following chart. During that time, Autodesk stock has generated an average return of 7.81 percent over the past ten years. Annualized, this corresponds to an extremely respectable profit of 119.25 percent.

What: Seasonax

One thing is certain: the topic of “green or clean economy” will be with us in the years to come. A look at the green scene with the help of seasonality is worthwhile and offers trading opportunities, because in addition to the three stocks presented, there are numerous other stocks that have regularly recurring seasonal patterns. To make it even easier to find such trading opportunities, Seasonax has introduced the new Seasonality Screener. This is an instrument for identifying trading opportunities with above-average profit potential on the basis of predictable seasonal patterns that are repeated in almost every calendar year.

Seasonality Screener
The screener is an integral part of the Seasonax subscription and helps to find suitable seasonal patterns for profitable trades from a certain date. T “he saves time and gives you a real head start,” said Muratovic. (kb)

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