The Best (and Worst) FAANG Stocks to Own in September

September is right around the corner, so we decided to take a look at some of the best and worst stocks to own during the historically bearish month. Appearing on our list were a trio of so-called FAANG stocks: Dow stock Apple Inc. (NASDAQ:AAPL), which could unveil its new iPhone next month; new Whole Foods owner Amazon.com, Inc. (NASDAQ:AMZN); and Google parent Alphabet Inc (NASDAQ:GOOGL). Below, we'll take a look at how AAPL, AMZN, and GOOGL stocks stack up in September, historically, as well as 21 stocks you may want to dump before Friday.

The Worst Stocks to Own in September 

Below are the 21 S&P 500 Index (SPX) components that have traded at least 10 years, and have averaged a loss of at least 3% in the month of September, according to Schaeffer's Quantitative Analyst Chris Prybal. 

Apple will reportedly launch three new iPhones on Tuesday, Sept. 12, according to The Wall Street Journal (subscription required). However, if history is any guide, speculators may want to steer clear of AAPL stock, which has averaged a September loss of 4.18% over the past 36 years, ending the month higher just one-third of the time.

At last check, Apple shares were 1% higher at $161.49, and earlier came within 51 cents of its Aug. 16 record high of $162.51. The stock has rallied more than 50% in the past year, and is up roughly 13% since its early July lows. What's more, the $156 area -- site of former resistance -- has emerged as a support line for AAPL stock since its post-earnings bull gap in early August.

Most analysts are in AAPL's corner, which could leave the shares vulnerable to downgrades, should Apple's expected Sept. 12 event fail to impress, or should September history prevail. Currently, 25 out of 32 brokerage firms deem Apple stock worthy of a "buy" or better endorsement.

Whatever your feeling toward AAPL, the stock has exceeded options traders' volatility expectations during the past year -- an attractive tidbit for would-be premium buyers. The stock's Schaeffer's Volatility Scorecard (SVS) stands at a lofty 90.

 

Best Stock Returns in September

Of the S&P 500 stocks that have traded at least 10 years and gained at least 4% in the month of September, Amazon stock tops the list. The shares have averaged a September gain of 10.03% over the last 20 years, according to Prybal, handily exceeding the next-highest average return of 5.93% (Delta Air Lines stock). Further, AMZN has ended September in the black 75% of the time -- also near the top of the list. (But for those uninterested in trading AMZN, consider this lineup of September-friendly biotech stocks.)

AMZN stock was last seen 0.3% higher at $948.07, but well off its July 27 record high of $1,083.31. Another 10.03% rally from current levels would place Amazon shares back above the millennium marker, in the $1,045.72 area. What's more, the stock's SVS of 83 is encouraging for options buyers, indicating AMZN has tended to make outsized moves on the charts during the past year, relative to what the options market had priced in.

Best September Win Rate

Meanwhile, fellow FAANG stock Alphabet tends to outperform in September. The stock has averaged a gain of 5.72% during the month, looking back 13 years. What's more, GOOGL shares have ended September higher 77% of the time -- tied for the best win rate of all stocks on our list.

GOOGL stock was last seen fractionally lower at $930.18. The security has struggled since peaking at $1,008.61 in early June, with the $920 level -- where the stock landed after a late April bull gap -- emerging as support. Still, GOOGL is up 17.4% in 2017, and another gain of 5.72% from current levels would place the shares around $983.38.

Recent options buyers have already been boarding the bullish bandwagon for Alphabet stock. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GOOGL sports a 10-day call/put volume ratio of 1.55 -- higher than 88% of all other readings from the past year. In other words, speculators have demonstrated a healthier-than-usual appetite for GOOGL calls over puts lately. Not even two weeks ago, it was Alphabet puts that were flying off the shelves.

Still, Alphabet's short-term options look like a bargain. The equity's Schaeffer's Volatility Index (SVI) of 14% is in just the 17th percentile of its annual range, indicating GOOGL's near-term contracts are attractively priced, from a historical volatility standpoint.