Three Top Stocks to Consider After Tax-Loss Harvesting

Dec 13, 2022

With 2022 wrapping up, look for a good deal of tax-loss harvesting.

Or, the act of selling losers that can then be used to offset capital gains taken throughout the year.  After all, since capital losses are tax deductible, why not take advantage of it, and reduce your year-end liability on your tax returns?

According to Investing News, “The key thing for investors to remember is that it has deadlines. For investors filing their taxes in Canada, the last day for tax-loss selling in 2022 is December 28. Stocks purchased or sold after this date will be settled in 2023, so any capital gains or losses will apply to the 2023 tax year. The system differs for those filing their taxes in the US, and based on information from the IRS, the last day for tax-loss selling this year is December 30.”

That’s one great year-end strategy with regards to pesky taxes.

The other strategy is to buy some of the stocks investors are using for tax purposes.  These are the stocks that were beaten silly over the course of the year.  They’re also the stock that can be bought at big discounts once tax-harvesting is over.

Three of the most beaten down stocks you may want to keep on radar include:

Amazon (AMZN)

The pullback in Amazon (AMZN) has gotten a bit ridiculous.

Sure, it’s seen slower growth, with lower-than-normal sales. In its third quarter, for example, the company posted revenue of $127.1 billion, which was up about 15% year over year.  Unfortunately, it was lighter than expectations for $127.46 billion. 

Multiple analysts have even lowered their price targets on the stock.  Inflation, supply chain issues, lower consumer spending, and fears of recession have been just as damaging. However, a lot of that negativity has been priced into the stock.  Plus, we have to consider that this $914.1 billion stock now trades at less than two times sales.  The last time it traded anywhere near this level was back in 2015.  

Target (TGT)

Target (TGT) was beaten badly in 2022. But that’ll happen with sky-high inflation, fears of a recession, and Americans living paycheck to paycheck.  It missed on earnings. Margins got nailed, and management lowered guidance for the fourth quarter.  

However, despite all of that negativity, the stock appears attractive.  Piper Sandler upgraded the TGT stock to overweight with a price target of $200. They noted, “Target is rapidly shifting inventory composition away from discretionary categories as the consumer continues to shift away from those key categories.” He also thinks that as Target pulls back on some of its promotional activity as we look ahead to 2023, it will be able to regain 50% of its gross margin compression, as noted by Yahoo Finance.

Meta Platforms (META)

META just could not catch a break in 2022.  All thanks to earnings, sales, and metaverse disappointments that left the stock for dead.  But don’t count it out just yet.  It’s simply making its way over a temporary speed bump.  Analysts at Evercore like META, too.  In fact, analyst Mark Mahaney says the average stock in the Internet group is down 53% year to date, “the worst performance…in many, many years,” as quoted by Barron’s.

He also believes the company is taking cost-cutting seriously, and that the META stock offers an “intrinsically compelling entry point.”

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