As the end of a big 2019 on Wall Street draws to a close, investors looking at big year-to-date capital gains are shifting their attention to that 2019 tax bill.
One popular method of keeping capital gains taxes low it to offset those gains by dumping the worst-performing stocks before the end of the calendar year. This popular technique is known as tax loss selling, and it could mean some market laggards will see even more selling pressure in the weeks to come.
Tax-loss sellers tend to be particularly active in strong market years, such as 2019, when they generally have large capital gains to offset. As a result, some of the worst-performing stocks of 2019 could get one last kick in the gut before Jan. 1, but opportunistic dip buyers could get some great year-end discounts on high-quality stocks.
Traders must wait at least 30 days before buying back positions they sell for tax purposes, creating a potential tailwind for underperforming stocks toward the end of January.
Tax Loss Buying Candidates
Traders looking to buy the potential year-end tax-loss dip should keep an eye out for opportunities in the next two weeks. Here are 10 stocks down at least 30% in 2019 that have consensus analyst Buy ratings, according to Finviz.
- Lyft Inc (NASDAQ: LYFT), down 39.9% year-to-date.
- Slack Technologies Inc (NYSE: WORK), down 45.2% YTD.
- Mylan NV (NASDAQ: MYL), down 31.1% YTD.
- ABIOMED, Inc. (NASDAQ: ABMD), down 45.5% YTD.
- EQM Midstream Partners LP (NYSE: EQM), down 36.9% YTD.
- ANGI Homeservices Inc (NASDAQ: ANGI), down 35.2% YTD.
- Nektar Therapeutics (NASDAQ: NKTR), down 35.2% YTD.
- Qurate Retail Inc Series A (NASDAQ: QRTEA), down 59.5% YTD.
- Antero Midstream Corp (NYSE: AM), down 40.3% YTD.
- Equitrans Midstream Corp (NYSE: ETRN), down 38.7% YTD.
Investors shouldn’t be buying stocks during tax loss season just because they have suffered heavy losses throughout the year. Many of the largest market laggards are low-quality stocks, so tax loss season should only serve as a buying opportunity for stocks with a clear bullish thesis.