This year has been a pretty good one for most stock investors. Unfortunately for stocks that have lagged the market in 2016, ‘tis the season for tax loss selling.
The final weeks of December often provide one last kick in the gut for the year’s worst-performing stocks. Investors have one last chance to sell their losing stocks to offset the gains they’ve made on other stocks throughout the year. Traders who use tax loss selling correctly can significantly reduce their capital gains taxes for the year.
Investors are much more likely to have gains to offset in years when the market has performed well. The S&P 500 is currently on pace to close out the year up 10.6 percent. That means that there are plenty of capital gains out there in need of reduction.
Here are three popular stocks that could see heavy tax loss selling headed into the end of the year.
Tax Loss Selling Stocks to Avoid: First Solar (FSLR)
First Solar, Inc. (NASDAQ:FSLR) stock has been hit especially hard, plummeting 49% year-to-date. FSLR capped off a year to forget in November when the company hosted an investor conference call to announce that it would miss its previous guidance numbers.
At the moment, it seems just about everything is going in the wrong direction for FSLR. Expenses are on the rise, but solar prices continue to fall. In addition, the company continues to pour money into restructuring efforts that may or may not pay off.
First Solar and other solar stocks likely won’t get much relief from Washington either, now that Donald Trump won the election and Republicans control both houses of congress.
“Trump does NOT support solar,” Axiom analyst Gordon Johnson said in October when comparing the two candidates’ energy plans.
FSLR is the second-worst-performing stock in the entire S&P 500 in 2016. That underperformance makes for a major tax loss selling opportunity.
Tax Loss Selling Stocks to Avoid: Allergan (AGN)
Solar isn’t the only segment of the stock market that hasn’t been…
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