These fallen stocks are contenders for tax-loss selling — and they could pop higher afterward

Published Thu, Oct 6 202212:04 PM EDTUpdated Thu, Oct 6 20222:05 PM EDT

As investors dump losing stocks as part of their tax-savings strategy, there are opportunities for traders to make a quick profit in certain names, according to Bank of America. This is the time of year when investors begin realizing losses on assets that have fallen in value as a way to offset any gains made this year and therefore reduce the amount of taxes they'll have to pay. Known as tax-loss harvesting, it typically peaks in October for institutional investors and December for individual investors. "This year could be a particularly big year for tax loss harvesting, given the high number of stocks which are down [year to date] ... and a higher potential for a bigger subsequent bounce in these stocks following the selling," Savita Subramanian, Bank of America's head of U.S. equity and quantitative strategy, wrote in a note Thursday. Since 1986, stocks down 10% or more from Jan. 1 to Oct. 31 have beaten the S & P 500 69% of the time Nov. 1 through the next Jan. 31, she said. When the S & P was down through October — like it is now — those stocks have outperformed 100% of the time, Subramanian added. However, if tax-loss selling takes place earlier than usual due to the market sell-off, that probability of outperformance from October to January drops to 63%. The S & P has lost more than 21% so far this year. To determine which names could bounce, Subramanian screened for names that dropped more than 10% for the year, as of Wednesday. She also narrowed it down by those that the bank has rated a buy and came up with 159 names. Here are 10 that made the list. Match Group , down more than 60%, is a notable decliner on the list. The online dating company's second-quarter revenue missed analysts' expectations. It also forecast in August that its third-quarter revenue would be flat at $790 million to $800 million. PayPal , on the other hand, issued stronger-than-expected second-quarter results in August. Elliott Management also announced it has a $2 billion holding in the digital payments company, which is down about 50% year to date. Meanwhile, General Motors announced its third-quarter vehicle sales Monday, showing an increase of 24% compared with a year ago. The automaker, down more than 40% so far this year, plans to increase production of its Chevrolet Bolt electric vehicles after they had their best quarterly sales ever. Amazon is hoping to boost sales heading into the holidays with its second Prime Day sale of the year, scheduled for Oct. 11-12. Bank of America recently lowered its price target on Amazon to $157 per share from $170 due to some macro pressure, but it is standing by its buy rating. Still, the firm's latest price target implies roughly 30% upside from Wednesday's close. Amazon is down nearly 28% year to date. — CNBC's Michael Bloom contributed reporting.

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