MW Here are the year's losing stocks that could see a big rebound in early 2025
By Barbara Kollmeyer
Evercore flags Nike, ZoomInfo and other 'tax-loss targets'
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 since12/31/21 - are tax loss candidates that could see momentumimprove 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
Stock index futures (ES00) (YM00) are inching higher early Monday, with bigger gains seen for tech (NQ00), 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.
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.
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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 partbecause 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
Spain's "Fat One" Christmas lottery handed out nearly $3.1 billion
The scary, weird angels topping Christmas trees this year.
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-Barbara Kollmeyer
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(END) Dow Jones Newswires
December 23, 2024 06:52 ET (11:52 GMT)
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