My 2023 Tax Loss Selling Recovery Portfolio, which I'll roll out in three tranches of four stocks in the coming weeks, has all the earmarks of being a real barn burner. Coming off a terrible year performance-wise for the 2022 version, in part because there were not a great deal of candidates, the 2023 edition is chock-full of interesting contenders. Indeed, I have my work cut out for me in narrowing down the list.
This will mark the sixth year of running this experiment, and the criteria for inclusion are as follows:
- 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
The idea is that names that were hammered during the year may suffer more damage as investors sell them off at year-end to offset gains, potentially setting these stocks up for a rebound in the New Year.
Coming off a positive year in the markets last year, there were so few candidates for 2022 that I reduced the year-to-date loss from 30% to 20%. In hindsight, I should have left it alone; this year it goes back to the original level.
Over the years, this exercise has been fairly successful, 2022 notwithstanding. Here is how this experiment has performed each year relative to the S&P 500 and Russell 2000, along with links to the final results and how each of the stocks performed.
2018: Up 22%; S&P 500 up 1%, Russell 2000 up 1%
2019: Up 30%; S&P 500 up 16%, Russell 2000 up 13%
2020: Up 35%; S&P 500 up 14%, Russell 2000 up 10%
2021: Up 55%; S&P 500 up 25%, Russell 2000 up 26%
2022: Down 44%; S&P 500 down 14%, Russell 2000 down 15%
The list of qualifiers for the 2023 version is currently more than 200, and for once, it includes a whole host of large-caps including Meta Platforms (META) , Qualcomm (QCOM) , General Motors (GM) , FedEx (FDX) , Baxter International (BAX) and Charter Communications (CHTR) , to name a handful.
Not surprisingly, you'll find travel-related names such as Carnival (CCL) , Expedia (EXPE) and Park Hotels & Resorts (PK) . There are plenty of retail-related stocks as well, including VF Corp. (VFC) , Kohl's (KSS) , CarMax (KMX) , Advance Auto Parts (AAP) and Boot Barn Holdings (BOOT) .
Perhaps surprisingly, I am only seeing one restaurant name at this point, One Group Hospitality (STKS) .
Of note are a couple others I've owned over the years, including Newell Brands (NWL) and Tutor Perini (TPC) . Notably, some members from the 2022 vintage of the portfolio, including Groupon (GRPN) and Tupperware Brands (TUP) , are back again.
I know what I'll be doing this weekend...
