• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Financial Services

Weight Watchers Produces Hefty Gain for This Sextet of Tax-Loss Stock Plays

Tax-loss selling can create value opportunities for those with strong stomachs, as seen with this mini portfolio of stocks.
By JONATHAN HELLER
Nov 27, 2017 | 11:00 AM EST
Stocks quotes in this article: WTW, GCI, GNRT, WDR, FIT, GNC

I've long been fascinated by tax-loss selling, especially because I am no stranger to owning companies that many others shun. Markets can over-punish names that have a few (or many) fleas, and this can create opportunities for those with strong stomachs.

As the year-end approaches, it is time to identify potential tax-loss selling candidates -- those that investors will sell in order to offset gains. Some of those affected may have the wherewithal to bounce once the selling pressure ends and the New Year begins, although there are no guarantees. Sometimes companies are too broken to fix.

Last year, I utilized a rather simple screen in an attempt to identify potential candidates for purchase, and followed it up with a few more candidates days later.

The screening criteria included the following:

  • down at least 30% year to date,
  • forward price-to-earnings (P/E) ratios below 15 in the next two fiscal years
  • minimum market cap of $100 million

While 42 names made the cut, I honed the list down to six, and the results were mixed, but interesting enough that I'll be repeating the process this year.

The results provided more ammunition for the notion of taking a scatter-gun approach -- purchasing several qualifying names instead of concentrating your investment in one or two. It was the great Peter Lynch who wrote that if you buy five stocks, one likely will knock the lights out, one will perform poorly and the other three will be about flat. The hope is the one that rises does so well that it provides a solid overall return, more than compensating for the other four. That was certainly the case here, although in this instance we focused on six stocks, not five.

With an average return of 47%, you could call this experiment a success, although I am not yet convinced; it appears that it was more luck than skill. Weight Watchers International Inc. (WTW) absolutely crushed it, up 309% amid renewed interest among investors and some solid results. However, from there, there was not a whole lot of excitement. Gannett Co. (GCI) was up about 20%, part of which was due to a solid dividend. Gener8 Maritime Inc. (GNRT) (up 12%), and Waddell & Reed Financial Inc. (WDR) (up 4%) were in positive territory, but underperformed the market.

Fitbit Inc. (FIT) was down about 10%, unable to attract enough positive interest or belief that the company can turn the corner despite a few positive signs, some new products and a solid balance sheet.

The biggest loser, however, has been nutritional products retailer GNC Holdings Inc. (GNC) , which has suffered through another very rough year, with the stock down 56%. Last year, when I wrote the initial column, it was trading at around 6 times 2018 consensus earnings estimates. Those estimates have been dialed back, the stock price has been cut in half, and it now trades at about 4.5 times 2018 estimates. The market is putting GNC in the "cheap for good reason" category.

I'll be repeating last year's experiment in an coming column.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Heller was long GCI and FIT.

TAGS: Investing | U.S. Equity | Financial Services | Consumer Staples | Consumer Discretionary | Consumer | How-to | Gaming | Stocks

More from Financial Services

SoFi Technologies Is Primed for a Rebound

Bruce Kamich
May 16, 2022 8:50 AM EDT

Here's where the shares may be headed next.

Affirm's Results Impressed and Here's Why I Want a Piece of the Action

Stephen Guilfoyle
May 13, 2022 11:00 AM EDT

There are several reasons why the shares were trading higher.

Affirm's Bounce Fails to Impress Me

Bruce Kamich
May 13, 2022 8:45 AM EDT

Don't expect AFRM to rally for long or go very far.

Time to Toss COIN

Bruce Kamich
May 11, 2022 11:56 AM EDT

There's no way around it, Coinbase's charts look tarnished following its earnings miss. Let's see if there's a silver lining in this for traders ... or not.

This Stock Had an Obvious Earnings Setback. Now It's a Bargain

Paul Price
May 5, 2022 7:00 AM EDT

I see another great chance to own this asset management company.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • 08:51 AM EDT PAUL PRICE

    Advice From the Future...

  • 12:20 PM EDT PAUL PRICE

    A Blast From the Past Regarding Bitcoin

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login