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Opinion: 'Tis the season for buying stocks dumped for tax reasons
By SP_COP on December 22, 2014 | From
Opinion: 'Tis the season for buying stocks dumped for tax reasons Shares of solid companies go on sale at this time of the year simply because itís the season for tax-loss selling.

Tax-loss selling hits stocks that have had a bad year. Investors want to dump them to beat the tax man by booking losses to offset gains.

But, come January, the tax-loss sellers are gone, and those stocks can rebound. Short-term traders might book quick profits.

Thereís no guarantee theyíll bounce right away. They might get swamped in a market downdraft. So I look at tax-loss selling candidates as discounted names to buy at an even bigger discount for potential outperformance over the next year or two.

Not surprisingly, many of the best tax-loss selling plays this year are in energy. Rather than give you straight energy plays to buy because oil will probably rebound in 12 months, as I did here, Iím suggesting a new group of stocks that are down on the mere misperception that they will be hit by lower oil prices, even though itís probably not true.

Iíve also got a few stocks linked to housing, another sector thatís had a tough year.

First, though, letís start with a good tax-loss selling pick in the drug sector.

GlaxoSmithKline GSK, +0.21%

Top managers at the British pharmaceutical giant need a stiff upper lip. Their stock has had a terrible year. The reason: All the competition and pricing pressure surrounding Glaxoís lead product, Advair for asthma and chronic obstructive pulmonary disease (COPD), which accounts for close to 20% of sales. This problem has had investors heading for the exits. Now, as the year closes, thereís an extra dose of selling as traders book tax losses....
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