Category: Tax Loss Stocks

Top Tax Selling Stocks: Bargains for a Possible Bounce in January

by Fred Fuld III

You may be wondering what a tax selling stock is. It is a stock that is currently selling for a low price but was trading at much higher levels earlier in the year.

As the year-end approaches, many investors employ the technique called tax harvesting , which is the selling of loser stocks to offset any gains that may have been established during the year.

With all the heavy selling, the price of the stocks that have had big drops tends to tank far more than what would normally take place during the rest of the year.

So traders and investors are on the lookout for stocks that are heavily hit, hoping for a little (or big) bounce in January, once the tax selling is over.

So if you are looking for these types of stocks, here is a selection of some that have dropped by over 75% year-to-date. They all have low market capitalizations so they should be considered speculative, as the market caps are all less than $800 million. However, all of these have a price to earnings ratio of less than 12 and all have a price sales ratio less than one.

Company Symbol Market Cap P/E Price
Francesca’s Holdings Corp. FRAN 45.86M 11.81 1.04
Ferroglobe PLC GSM 334.56M 4.15 1.81
Iconix Brand Group, Inc. ICON 9.41M 0.29 0.12
MiMedx Group, Inc. MDXG 190.98M 5.53 1.55
OncoMed Pharmaceuticals, Inc. OMED 31.76M 6.08 0.81
United Natural Foods, Inc. UNFI 788.58M 4.09 11.09
Ultra Petroleum Corp. UPL 189.41M 1.36 0.92

If the above stocks are too speculative for you, here are some stocks that are down over 50% year-to-date and have market caps in excess of $2 billion. They all have P/E ratios less than 14, and a price sales ratio of less than one.

Company Symbol Market Cap P/E Price
CommScope Holding Company, Inc. COMM 3.39B 13.91 16.89
Mohawk Industries, Inc. MHK 8.96B 9.65 117.02
Owens Corning OC 4.83B 10.78 43.44
Spectrum Brands Holdings, Inc. SPB 2.43B 4.66 45.81
Thor Industries, Inc. THO 2.79B 6.25 54.04

Maybe someone’s tax losses can be your tax stock gains.

The Top 11 Tax Loss Stocks

What is a tax loss stock, you may ask? It is a stock that is down for the year, with a price that is abnormally suppressed in December due to investors who want to establish a loss before the end of the year, for tax purposes. Investors like to buy these stocks in anticipation of a bounce back in January.

I have gone through a database of all the stocks that are down by at least 50% year-to-date. Then I extracted the companies that are profitable, based on their forward price-to-earnings ratio, and a price to earnings growth ratio of less than 3 (the lower the PEG, the better the buy).

Here is the list:

AK Steel (AKS)
Big 5 (BGFV)
CPL Properties (CBL)
DHI Group (DHX)
Francesca’s Holdings (FRAN)
Genesco (GCO)
The Meet Group (MEET)
NuStar (NSH)
PCM (PCMI)
Smart Sand (SMD)
The Shop Holdings (TTS)

Disclosure: The author didn’t own any of the above at the time the article was written.