The days left to trade in 2024 can now be counted on one hand and with Christmas and the start of Hanukkah falling in the same week this year, investor ranks should start thinning out.
Looking ahead to 2025 is a team of Evercore ISI strategists led by Julian Emanuel, who in our call of the day , offer up some stocks which lost ground in 2024 but which could be see a rebound in the new year.
Emanuel and his team looked at tax-loss selling, which happens at the end of the year as investors unload their biggest-losing stocks to offset capital gains.
“Tax Loss Targets” – stocks down 20%+ YTD [year to date], down 50%+ since end 2021 and which have yet to make new all-time highs since
12/31/21 – are tax loss candidates that could see momentum
improve after the New Year,” Emanuel writes in a note to clients.
He and his team believe small-capitalization stocks in particular could benefit, with the Russell 2000 RUT lagging behind its peers since 2022, up just 10.6% year to date versus 24% for the S&P 500 index SPX. Those smaller stocks make up most of the tax loss candidates for 2024, they note.
The advantage for Russell stocks is that smaller and low momentum stocks tend to outperform in January and the group as a whole is still trading at a below-average premium to the S&P 500 and may benefit from “a Fed which still maintains an easing bias,” said Emanuel.
While small-caps could see a big benefit, they pick stocks from across the Russell 3000 RUA — large-cap, midcap and small-cap U.S. equities — with 45% of that group down year to date against a 23% rise for the index overall.
They flag Nike NKE in particular (Evercore rates it outperform ) as at a “critical crossroads,” after its recent outlook . Evercore analyst Michael Binetti believes Nike bought time with its guidance cut and gave itself earnings per share flexibility to jump-start a turnaround.
And “any sign fundamentals could bottom in mid 2025 would result in the stock starting to trade on normalized margins and a recovery multiple,” said Binetti.
Other names Evercore flags — ZoomInfo Technologies ZI, Avis Budget CAR, Cleveland-Cliffs CLF and StoneCo STNE — all unrated by the analysts, but part of the “low momentum, fresh starts” stock list.
Here’s their complete screen of tax-loss losers poised to bounce:
The last word goes to MarketWatch’s Mark Hulbert, who recently wrote about how investors selling tax losers can miss out on any bounce that could be coming. Check out his workaround.
Opinion: Year-end selling is hitting these 7 stocks. How their tax loss can be your gain.
The markets
The Nasdaq Composite COMP is rising in early trade , with smaller gains for the S&P 500 SPX, but the Dow industrials DJIAare struggling, following Friday’s action that saw a rebound for all three indexes, though losses for the week.
|
Key asset performance |
Last |
5d |
1m |
YTD |
1y |
|
S&P 500 |
5930.85 |
-1.99% |
-0.64% |
24.34% |
24.74% |
|
Nasdaq Composite |
19,572.60 |
-1.78% |
2.99% |
30.39% |
30.55% |
|
10-year Treasury |
4.527 |
12.20 |
24.80 |
64.61 |
63.02 |
|
Gold |
2645.1 |
-0.94% |
0.71% |
27.67% |
28.12% |
|
Oil |
69.79 |
-1.20% |
1.03% |
-2.16% |
-5.03% |
|
Data: MarketWatch. Treasury yields change expressed in basis points |
|||||
Read: Wall Street’s ‘Santa Claus rally’ window is about to open with the Dow down in December
The buzz
Honda JP:7267 and Nissan JP:7201 have officially announced that they’re in talks for a merger, following reports of discussions last week . Honda also said it would buy back as much as $7 billion worth of shares, and its U.S.-listed shares are soaring .
Video platform Rumble stock RUM is climbing 45% after Friday news of a $775 million investment from influential crypto giant Tether .
Novo Nordisk shares NVO are rebounding after Friday’s big selloff. One analyst says the stock drop linked to disappointing results from a trial of the drugmaker’s new weight-loss drug were overdone.
The Conference Board’s Confidence Survey is due at 10 a.m. Eastern.
Best of the web
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The chart
Goldman Sachs strategists have come up with a new market model that suggests investors buy materials, healthcare, utilities, real estate and software and services over the next six months. “Our sector model identifies ‘high conviction’ overweights based on the modeled probability that an equal-weighted sector outperforms the equal-weighted S&P 500 by 5 [percentage points] or more during the subsequent 6-month period,” a team led by David Kostin, chief U.S. equity strategist, told clients in a recent note.
Note the defensive tilt to those recommendations, to which Goldman says: “Our model recommends a large number of defensive overweights in part
because of the level of economic growth optimism already priced into the equity market today.”
Top tickers
These were the top-performing tickers on MarketWatch as of 6 a.m. Eastern time:
|
Ticker |
Security name |
|
TSLA |
Tesla |
|
NVDA |
Nvidia |
|
GME |
GameStop |
|
PLTR |
Palantir Technologies |
|
MSTR |
MicroStrategy |
|
AAPL |
Apple |
|
TSM |
Taiwan Semiconductor Manufacturing |
|
RGTI |
Rigetti Computing |
|
AMD |
Advanced Micro Devices |
|
NIO |
NIO |
Random reads
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The scary, weird angels topping Christmas trees this year.
