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In Parts 1 and 2, we explained that it is tax-loss selling season. Every year around this time investors are afforded the opportunity to sell their losing positions thereby "harvesting" their tax losses to offset and/or eliminate the capital gains taxes that they may have realized on their other positions. Tax-loss selling is often concentrated in those stocks that have suffered the greatest declines during the year. We therefore like to review the list of stocks with the greatest year-to-date declines and attempt to identify from that list a few names that look "oversold," have decent fundamentals and which might be subject to a technical bounce as tax-loss selling dries up as the end of the year approaches and disappears entirely with the advent of the new year.

To that end we have identified 15 stocks that have suffered year-to-date declines of at least 20%, have a small enough market cap that the tax-loss selling could have artificially depressed share prices and are predicted to have earnings per share and/or revenue increases in the next fiscal year compared with the current year. With the majority of stocks having risen this year perhaps this year's bounce will be amplified. Here are the next five companies on our list:

Rackspace Hosting, Inc. (RAX)

Rackspace provides cloud based computing services managing web-based IT systems worldwide. The company has a market cap of $4.98 billion and the stock trades an average of 2.6 million shares per day. Earnings are estimated to be $0.61 per share this year and are slated to increase to $0.78 per share next year. Revenues are estimated to be $1.53 billion this year and are estimated to increase to $1.78 billion next year. The stock is off 52% this year.

It has pretty much been downhill since the highs in January of 2013. Rackspace did hit a fresh low recently and the stock is bouncing off of those levels heading into 2014.

(click to enlarge)

Source: Yahoo Finance

Teradata Corporation (TDC)

Teradata provides analytic data solutions and data warehousing solutions that include software, hardware consulting and support services. The company has a market cap of $6.89 billion. The stock trades an average of 2.9 million shares per day. Earnings for Teradata are estimated at $2.74 per share this year and are estimated to increase next year to $3.06 per share. Revenues are estimated at $2.67 billion this year and $2.84 billion next year. The stock is down 33% this year.

What had been a solid performer since 2009 has become a loser since September 2012. The stock now trades at two year lows.

(click to enlarge)

Source: Yahoo Finance

Titan Machinery, Inc. (TITN)

Titan Machinery owns and operates a network of full service agricultural and construction equipment stores in the United States and Europe. Titan Machinery has a market cap of $319 million and the stock trades an average of 378,000 shares per day. Earnings this fiscal year are estimated at $0.64 and are estimated to increase to $0.95 per share next fiscal year. Revenues are estimated at $2.24 billion this fiscal year and $2.22 billion next fiscal year. The stock is down 40% this year.

Titan is another name trading at two year lows and in a downward trend. With the most recent sell-off the stock might be positioned for a bounce in 2014.

(click to enlarge)

Source: Yahoo Finance

Titan International Inc. (TWI)

Titan International engages in the manufacture and sale of wheels, tires and undercarriage systems and components for off-highway vehicles. The company has a market cap of $906 million and the stock trades an average of 1 million shares per day. Earnings are estimated at $0.94 this year and are estimated to increase to $1.08 per share next year. Revenues are estimated to be $2.19 billion this year and are estimated to increase to $2.30 next year. The stock is down 22% this year.

Even with the recent rally in shares, Titan International could see a bounce come early January.

(click to enlarge)

Source: Yahoo Finance

Ultratech, Inc. (UTEK)

Ultratech develops, manufactures and markets photolithography, laser thermal processing and inspection equipment. Ultratech has a market cap of $788 million and the stock trades an average of 384,000 shares per day. Earnings are estimated to be $0.06 this year and are slated to increase to $0.56 per share next year. Revenues are estimated at $161 million this year and are estimated to increase to $194 million next year. The stock is down 28% this year.

Ultratech shareholders have seen disappointment after disappointment in 2013. The recent rally off of two year lows could be setting the table for something bigger in 2014.

(click to enlarge)

Source: Yahoo Finance

In conclusion, all of the companies featured on our list have had a horrendous year in the stock market with each down in excess of 20% in spite of a rising market. Each company is a prime candidate for tax loss selling and likewise should experience a bounce in their stock prices as tax selling abates as the year comes to an end. Additionally, each of our featured companies has improving fundamental outlooks with earnings per share for each company estimated to increase next year. We feel the stage is set for a potentially rewarding 30 to 45 day trade in each of these companies.

Source: Tax Loss Candidates To Buy - Part 3