Let's roll out the second tranche of my 2022 Tax Loss Selling Recovery Portfolio, following Monday's reveal of the first group of four. This year, unlike the last two years, there will not be a third tranche. I simply can't find enough compelling names out of the 60 or so candidates and would rather scale back then just fill slots.
Here are the second four:
Video game publisher Activision Blizzard (ATVI) has had a difficult 2021, with its shares down 37% year to date. In recent days Activision shares have been volatile due to reports of misconduct at the company, which have embroiled the CEO, so this one comes with some controversy. ATVI shares currently trade at 15x and 13x consensus earnings estimates for 2022 and 2023, respectively. Activision ended its latest quarter with $10 billion, or $12.85 per share, in cash and short-term investments and $3.6 billion in debt. This one could have a wild ride in the days ahead.
Generic and brand name drugmaker Viatris Inc. (VTRS) was formed late last year via the merger of Pfizer's (PFE) Upjohn business and Mylan, and is down 34% year to date. Viatris comes with a lot of debt -- more than $23 billion at the end of the latest quarter. Still, it trades at just over 3x consensus earnings estimates for 2022 and 2023. VTRS currently yields 3.5%.
Broadband and video service company Altice USA Inc. (ATUS) has seen its shares plunge 56% so far this year. It is competing with the likes of Verizon Fios (VZ) , which is not an easy road. Still, for the purposes of this portfolio, the long term does not matter; the question is whether a given name has been punished more than it deserves and whether there is any upside. Altice currently trades at 10x and 8.5x consensus earnings estimates for 2022 and 2023, respectively. Altice is another name with a lot of debt, to the tune of $26.8 billion. Interestingly, short interest as a percentage of float currently stands at just over 22%, so there are plenty of investors who are betting on shares falling further.
Last but not least is Diebold Nixdorf Inc. (DBD) , formerly known as Diebold. The company, which specializes in ATM machines and other banking-related products and services, is down 19% year to date. Diebold Nixdorf shares currently trade at 4.5x and 4x consensus earnings estimates for 2022 and 2023, respectively. This is yet another name with considerable debt, $2.5 billion as of the end of the third quarter, to go along with $230 million in cash. This was a $30-plus stock in 2017 and certainly has seen better days.
There you have it -- slim pickings for the 2022 Tax Loss Selling Recovery Portfolio. However, this is not a buy-and-hold forever portfolio. Rather, it is an attempt to take advantage of situations where companies that are expected to be profitable in the coming years and potentially have been oversold, perhaps at least partially due to year-end tax loss selling, rebound in the New Year.
