Dates to Watch in December

December 7, 2009

With just a few days left in this decade, December is shaping up to be an exciting month for investors. We've already seen one of the best employment reports in two years. The stock market is also making fresh bull-market highs.

I'm especially excited for December because it's historically the best month for stocks. The data shows that over the last 100 years, the Dow has risen in December 71% of the time which is the most for any month. I'm also excited for this month, because we're finally closing the books on the worst decade for stocks since the 1930s. Hopefully, the 'Teens will be much better for investors.

Now I want to highlight some important dates to watch out for in December just like I did with my list of important economic items for November.

The first big date is next Thursday, December 10. This is when Ebix (EBIX) splits its stock 3-for-1. I've been a big fan of Ebix for several months. The company provides important back-end operations for the insurance industry. This may sound boring but don't let Ebix fool you, this is a high-growth business.

Ebix currently has over 100 insurance companies as clients. What I like about the company is that 80% of their revenue is recurring. Since I first recommended Ebix in March in my Emerging Growth service, the stock is up over 200%. The stock split will make the shares more liquid and I expect to see more gains in the weeks ahead. Ebix is a very Strong Buy.

The next important date will be Friday, December 11. This is the retail sales report. I should caution investors that the retail sector is very tricky right now. Some retailers are excellent buys but many others are not. This retail sales report is crucial because it will give us a glimpse at how well the holiday will be. One of my favorite retailers continues to be Amazon.com (AMZN). I'm expecting very strong sales for Amazon this holiday season. The stock has been making a string of new highs and I expect to see more in 2010.

Amazon isn't my only favorite retailer. One important test of this holiday season will come on Tuesday, December 15 when Best Buy (BBY) reports its third-quarter results. Best Buy missed its second-quarter earnings by five cents a share so a lot of investors want to see if they're back on track. The current estimate is for 42 cents a share. Frankly, I like Best Buy a lot and I think last earnings season was merely an earnings glitch. This is a strong company with an excellent brand. I'm expecting a strong earnings report from them. The stock continues to be a solid buy.

On Wednesday, December 16, the government will report the latest Consumer Price Index. This will tell us how much inflation there was for the month of November. I don't expect to see much inflation at all. Inflation, however, won't stay subdued for long. As the economic recovery gains steam, all those dollars that the government printed will start coming back to hurt us. Slowly, prices will start creeping up on consumers and we may see a bout of inflation similar to what he had 30 years ago. Inflation is a big problem, but just not yet.

On Tuesday, December 22, we'll get the final revision to the third-quarter GDP report. Since this is for the third quarter, most of Wall Street will view this as "old news" but I think it's important to keep a close eye on what the report says. The initial report for Q3 GDP showed a growth rate of 3%. That was pared back last month to 2.8%. The government still needs to include the trade data so the weak dollar may push the final report to 3.3% or even higher. The bottom line is that the economy is growing again.

I also have to point out the most important day of the month–and to many us, the most important day of the year–Friday, December 25. The stock market will be closed all day on Christmas Day. The exchanges will also close early, at 1 pm, on Christmas Eve, Thursday, December 24.

Finally we have Thursday, December 31–the final day of the month, year and decade. This is usually a busy day for Wall Street. I think we'll see a strong rally continue into New Years and the first few weeks of 2010.

I want to wish everyone a happy holiday season and a prosperous new year.