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It's the end of the year and many investors are selling stocks at a loss to shield themselves from taxes on any capital gains they've already made during the year. This is the practice of tax-loss selling and with it comes a window of opportunity for investors to buy cut-rate shares that have the potential to rebound once the New Year hits and tax-loss selling pressure subsides. With that in mind, here are four of my favorite tax-loss selling bounce-back candidates heading into 2014:
Accuride Corp. (NYSE:ACW) - NYSE
Shares of Accuride, a commercial vehicle components manufacturer, are at $3.59 today with a 52-week range of $2.99-$6.88. ACW's 50-day moving average is $3.56 and its 200-day moving average is $4.86. This November, ACW plummeted 31% as a result of sub-par Q3 earnings in which Accuride's overall sales fell almost 20% with a net loss drop of 47% to $8.4 million, or $0.18 per share. We saw similar circumstances unfold during the same time frame in 2012. ACW was then trading at $2.41 when the company posted weak Q3 results that included a net loss of $17.7 million, or $0.37 per share. Tax-loss selling pressure ensued and ACW share price went on to perform poorly for most of that November, dipping as low as $2.29. By the end of January 2012 however, ACW shares had climbed up to $3.76.
With ACW shares fading again this year, I think we might see another rally after tax-loss selling abates towards the end of the month. Accuride recently reached a new five-year collective bargaining agreement with the United Steelworkers Local No. 2-475, which represents approximately 600 hourly associates at Accuride`s Brillion Iron Works subsidiary. Along with this new labor agreement possibly providing stability down the road, Accuride has also appeared to strengthen their product line with the recent launch of Steel Armor™, a proprietary coating technology for commercial vehicle steel wheels that extends steel wheel service life by up to two additional years when compared to standard coatings currently used in the industry.
Platinum Group Metals Ltd. (NYSEMKT:PLG) - NYSE MKT
Shares of Platinum Group, a developer of platinum operations in South Africa and Canada, are at $1.08 today with a 52-week range of $0.80-$1.52. PLG's 50-day moving average is $1.21 and its 200-day moving average is $1.08. Falling platinum prices and tax-loss selling pressure have contributed to the lackluster performance of the stock this month, but investors should still note the company's encouraging cash and financing positions heading into what many analysts believe will be a better year for the platinum industry.
Platinum Group reported in its November 10-K that the company's cash position was $121.94 million, which includes $10.15 million in restricted cash and around $83.0 million in cash with none being restricted. What's more, the company announced last week a C$175 Million bought deal financing with a group of underwriters headed by BMO Capital Markets and GMP Securities L.P., wherein the underwriters have agreed to buy on a bought deal basis, 148.5 million common shares at a price of C$1.18 per common share for gross proceeds of C$175.23 million. Although the platinum sector is in flux with the threat of a strike across South Africa's platinum industry looming, PLG still looks poised to rebound in 2014 considering its solid cash and financing positions plus the platinum industry's projected improvement.
Threshold Pharmaceuticals Inc. (NASDAQ:THLD) - NasdaqCM
Shares of Threshold, a biotechnology company focused on the discovery and development of drugs targeting tumor hypoxia are at $4.53 today with a 52-week range of $4.02-$6.11. THLD has a 50-day moving average of $4.49 and a 200-day moving average of $4.91. Unlike Accuride and Platinum Group, Threshold's most recent financial results (Q3 2013) were pretty good when compared to Q3 2012, as net income went up from $1.0 million to $1.2 million while revenue grew from $1.8 million to $3.2 million. The company also reported that the Phase 3 trial of its TH-302 in soft tissue sarcoma remained on track to complete enrollment of all 620 patients around the end of this year.
What really caught me eye in the most recent 10Q. Threshold has already obtained $97.5 million in upfront and milestone payments from last year's deal with Merck KGaA (OTCPK:MKGAF). The agreement is a global licensing opportunity worth up to $550 million, wherein Threshold initially received an upfront payment of $25 million with the potential to receive up to $525 million in milestone payments. Despite its positive indicators, tax-loss selling pressure has sent THLD shares sliding a bit this past week, giving investors another opportunity to take advantage of this behavior before it begins to dissipate in January.
Integral Technologies, Inc. (OTCQB:ITKG) - OTC Markets
For those interested in a micro-cap play, shares of Integral, a designer and producer of proprietary hybrid conductive plastics, are at $0.30 today with a 52-week range of $0.20-$0.83. ITKG's 50-day moving average is $0.35 and its 200-day moving average is $0.44. ITKG has experienced a drop this month from the $0.35 range in mid-November to the $0.30 range we're at now. Note that ITKG's trajectory around this time last year when the stock reached a 52-week low of $0.21 a couple of times in December 2012, but bounced back to $0.29 by the end of January 2013. ITKG performed much the same the year prior as well. ITKG shares fell to $0.28 in the middle of December 2011, only to climb to $0.43 by the end of January 2012.
In view of this tax-loss selling trend, investors should also keep in mind Integral's recent announcement that it successfully transferred the science, proprietary processes and documentation necessary for the manufacture of its hybrid conductive plastics line to its manufacturing partner, global high-tech materials maker Hanwha L&C. Integral has stated that it believes Hanwha will have a dedicated line for the manufacture of its conductive hybrid plastics in place by early 2014. Considering this upcoming catalyst and the stock's recent history of experiencing seasonal tax-loss selling pressure, ITKG may rebound yet again after the New Year hits.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.