Identifying Rebound Opportunities: Stocks Facing Tax-Loss Selling Pressure
As the holiday season approaches, investors turn to a popular tactic known as tax-loss harvesting. This strategy involves selling investments at a loss to offset capital gains and reduce taxes. While 2023 has been a strong year for the market, not all sectors have experienced significant gains. Utilities, consumer staples, energy, and health-care stocks within the S&P 500 are projected to finish the year with losses. However, CNBC Pro has used its stock screener tool to identify stocks that could be potential rebound candidates despite facing pressure from tax-loss selling.
Criteria for Rebound Candidates
To identify these rebound candidates, CNBC Pro looked for stocks that have lost 20% or more year-to-date through the third quarter but have shown at least a 5% increase in the fourth quarter. These stocks are also favored by analysts, with a minimum of 51% having a buy rating and an average price target indicating a 10% upside or more.
Promising Rebound Candidates
Among the stocks that meet these criteria, Insulet has shown the strongest fourth-quarter performance, with shares up nearly 19% after a 35% slump in the first three quarters of the year. Analysts have a positive outlook on the maker of diabetes technology, with an average price target suggesting over 15% upside. ResMed, a CPAP device maker, has also made the cut. Although shares declined by almost 23% through the third quarter, they have rebounded by about 9% in the current quarter, and the average price target indicates a further 17% upside.
Sunrun, a solar energy company, offers the greatest potential for upside, with the average price target suggesting shares could gain nearly 45%. Despite a 42% drop in shares through the third quarter, Sunrun has rallied by approximately 11% since the beginning of the fourth quarter. Additionally, utilities stocks AES Corp and Clearway Energy round out the list of rebound candidates.
In conclusion, while some sectors face pressure from tax-loss selling, certain stocks show promise as rebound candidates. These stocks have experienced significant declines but have shown positive momentum in the fourth quarter. With favorable ratings from analysts and potential upside according to average price targets, these stocks may present attractive opportunities for investors seeking to capitalize on potential rebounds.
Rebound Opportunities Amid Tax-Loss Selling: Implications for New Businesses
As the year-end approaches, investors are employing a common strategy known as tax-loss harvesting. This tactic, which involves selling investments at a loss to offset capital gains and reduce taxes, is creating a unique market dynamic. While some sectors are projected to finish the year with losses, others are emerging as potential rebound candidates. This scenario presents a unique landscape for new businesses.
Identifying Rebound Opportunities
New businesses, particularly those in the investment sector, can capitalize on this trend. By identifying stocks that have lost significant value throughout the year but are showing signs of recovery in the fourth quarter, new businesses can position themselves to take advantage of potential rebounds. Stocks like Insulet, ResMed, and Sunrun, which have experienced significant declines but are favored by analysts, present such opportunities.
Capitalizing on Market Dynamics
New businesses can leverage these market dynamics to their advantage. By understanding the criteria for identifying rebound candidates, such as significant year-to-date losses followed by fourth-quarter gains and favorable analyst ratings, new businesses can make informed investment decisions. This strategy can be particularly beneficial for businesses in the financial sector, which can use this information to guide their investment strategies and provide valuable advice to their clients.
Looking Ahead: Potential for Growth
While tax-loss selling presents challenges for some sectors, it also creates opportunities for growth. Stocks like Insulet, ResMed, and Sunrun, which are showing signs of recovery despite significant losses, offer promising prospects for new businesses. By capitalizing on these rebound opportunities, new businesses can position themselves for success in the coming year.
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