- Selling stocks before the year’s end to offset taxes on gains and income has been popular for decades.
- Bank of America Merrill Lynch analysts combed through the stocks they still think are good buys, but have lost steam this year, to see which might be a good idea to sell in order to lower your tax bill.
Financial markets have had a spectacular year. The S&P 500 has gained 14.65% and seemingly hits news highs every day.
Mutual funds and other investors who have been fortunate enough to profit from these gains are smart about taxes, and make use of a roughly 30-year-old practice known as tax loss harvesting, or selling off underperforming stocks to lower their total taxable profit at the end of the year.
Bank of America Merrill Lynch analysts rounded up a full list of stocks that have seen a temporary decrease in price possibly due to this tax loss harvesting, but are still primed for a rebound thanks to solid underlying fundamentals. The bank says these stocks could outperform the market from now until the beginning of next year.
“The strategy of owning tax-loss candidates from November to January had an impressive track record from 2000-2012, outperforming the market in all but one year (2007) during that 12-year period,” analysts Marc Pouey and Andrew Shields wrote in a recent note to clients. “But it underperformed from 2013-2015, perhaps overshadowed by other year-end macro factors during those years (government shutdown, end of OPEC price support, central bank policy).”
Here are there top picks for stocks to own into the new year for a few extra basis points of profit:
12. O'Reilly Automotive
Ticker: ORLY
Sector: Consumer Discretionary
Year-to-date loss: -21.76%
Current price: $219.34
11. Alaska Air Group
Ticker: ALK
Sector: Industrials
Year-to-date loss: -25.13%
Current price: $65.88
10. AutoZone
Ticker: AZO
Sector: Consumer Discretionary
Year-to-date loss: -21.81%
Current price: $618.41
9. Noble Energy
Ticker: NBL
Sector: Energy
Year-to-date loss: -32.85%
Current price: $25.81
8. Kimco Realty
Ticker: KIM
Sector: Real Estate
Year-to-date loss: -23.92%
Current price: $19.30
7. Hess
Ticker: HES
Sector: Energy
Year-to-date loss: -29.79%
Current price: $44.09
6. Anadarko Petroleum
Ticker: APC
Sector: Energy
Year-to-date loss: -32.37%
Current price: $47.50
5. Viacom
Ticker: VIAB
Sector: Consumer Discretionary
Year-to-date loss: -34.03%
Current price: $23.69
4. Signet Jewelers
Ticker: SIG
Sector: Consumer Discretionary
Year-to-date loss: -21.9%
Current price: $74.20
3. Envision Healthcare
Ticker: EVHC
Sector: Healthcare
Year-to-date loss: -53.8%
Current price: $29.25
2. General Electric
Ticker: GE
Sector: Industrials
Year-to-date loss: -42.36%
Current price: $18.25
1. Range Resources
Ticker: RRC
Sector: Energy
Year-to-date loss: -50.04%
Current price: $17.20
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