• 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
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

This Portfolio of Potentially Cheap Stocks Is Outperforming the Markets Early On

My tax loss selling recovery strategy is quietly getting the job done. Now let's see what earnings season brings.
By JONATHAN HELLER
Jan 06, 2023 | 01:30 PM EST
Stocks quotes in this article: META, EBAY, QCOM, F, HBI, KSS, HZO, PARA, NWL, VWE, ELAN, WWW

Just over one month since inception, my 2023 Tax Loss Selling Recovery Portfolio is somewhat quietly getting the job done, doing a bit better than the markets as a whole, although that's not saying much.

The idea behind this annual pursuit is to identify potentially cheap names that were down sharply in in the prior year and might be pushed even lower at year-end as market participants book losses for tax purposes, but could recover in the New Year if selling pressure subsides. The objective is to outperform the S&P 500 and Russell 2000 indexes, and I've taken positions in all of the names.

Here are the criteria for inclusion:

  • 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

So far, the portfolio is down about 2.8%.

Tranche 1, released on 11/28, is down 2.8%, ahead of the S&P 500 (down 5.4%) and Russell 2000 (down 5.7%). This is the tranche with the largest, most well-known names. Meta (META) (up 14%) is the best performer, and surprising early winner in the portfolio. It did not take much as the shares had been absolutely hammered in 2022. eBay (EBAY) (down 4%) is holding its own, while Qualcomm (QCOM) (down 10%) and Ford (F) (down 12%) are sucking wind so far.

Tranche 2, released on 11/30, is down 1.9%, beating both the S&P 500 (down 3.9%) and Russell 2000 (down 6%). Hanesbrands (HBI) (up 10%) is the best performer, but that's still a small uptick for a company which fell 58% in 2022. The shares yield 8.3%, and one of the questions investors have here is whether that dividend can be maintained, especially given the company's debt load. Kohl's (KSS) (down 18%) continues to struggle, while MarineMax (HZO) (up 2%) and Paramount Global (PARA) (down 3%) are holding their own.

Tranche 3, released 12/2 is down 3.6%, better than the S&P 500 (down 6.6%) and Russell 2000 (down 6.9%). Newell Brands (NWL) (up 10%) is leading the way so far; another name with a high dividend yield (6.5%). Vintage Wine Estates (VWE) (down 16%), continues its losing ways from 2022 when shares fell 72%. VWE, the second worst overall performer in the portfolio, currently trades at 8x 2024 consensus earnings estimates. Elanco Animal Health (ELAN) (down 5%) and Wolverine World Wide (WWW) (down 3%) round out this tranche.

I can't say that I am pleased with performance so far, but am looking forward to the effect earnings season will have on this portfolio. It is going to be a wild ride.

(Please note that due to factors including low market capitalization and/or insufficient public float, we consider some stocks mentioned in this story to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)

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 META, EBAY, QCOM, F, HZO, HBI, KSS, PARA, NWL, ELAN, WWW and VWE.

TAGS: Fundamental Analysis | Investing | Markets | Small Cap | Stocks | Value Investing | U.S. Equity

More from Stocks

Chevron Is Not Only Greasing the Wheels, It's Turbocharging Them

Jim Collins
Jan 26, 2023 5:07 PM EST

Let's look at why CVX's buyback news is a big deal for investors.

Traders Hold Their Noses and Buy

James "Rev Shark" DePorre
Jan 26, 2023 4:27 PM EST

The dull market got a boost from Tesla, but this is not the kind of action we want to see.

The Long-Term Trend of Booz Allen Hamilton Is Bullish

Bruce Kamich
Jan 26, 2023 12:15 PM EST

If the earnings report is bearish, here's what to know.

As the Bears Battle the Bulls, the Market Action Remains Choppy

James "Rev Shark" DePorre
Jan 26, 2023 11:40 AM EST

GDP, unemployment claims, and durable goods reports were better than expected, creating hope that the Fed will be able to create a soft economic landing.

Charter Communications: The Path of Least Resistance Is Higher

Bruce Kamich
Jan 26, 2023 11:27 AM EST

Here are the key price levels to watch in the days ahead.

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

  • 03:06 PM EST BOB LANG

    LEAPS Webinar

    This week, I offered a free webinar session talkin...
  • 02:53 PM EST REAL MONEY

    LIVE EVENT: Chris Versace and "Sarge" Guilfoyle Share Their Stock Market Insights

    This Monday, Jan. 30, at 12 p.m., our very own exp...
  • 04:58 PM EST REAL MONEY

    The Latest AAP Podcast!

    Listen in as AAP Tackles Earnings, the Fed, Recess...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 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