Investors are selling losing stock positions to ease their 2022 tax burden — and that could prove to be an attractive buying opportunity for bargain hunters. Towards the end of the year, investors turn their attention to a strategy known as tax loss collection in their taxable brokerage accounts. This involves selling losing positions in your portfolio and using those losses to offset realized capital gains elsewhere. The tech sector, in particular, seems ripe for tax-loss selling after falling more than 23% this year. For investors to be able to claim these losses on their tax returns, they must avoid violating the wash sale rule. This means that if you sell your investment at a loss and within 30 days of the sale acquire an asset substantially identical to it, you will not be able to claim the loss. Morgan Stanley highlighted stocks that could be good contenders that are “ripe for buyback” after investors realize their tax losses. The company looked for names that are down more than 20% this year and rated as overweight. “Stocks that have sold off on positive analyst ratings and a benign outlook may receive a positive offer in the meantime,” wrote Todd Castagno, Morgan Stanley’s global valuation, accounting and tax strategist, in a Nov. 18 note. Here are 10 names that could be top contenders for purchase, according to the company. Google’s parent company Alphabet has plummeted 32% this year. Back in October, the tech stock experienced its worst day since March 2020 after Alphabet missed expectations for revenue and earnings in the third quarter. Activist investor TCI Fund Management also recently called on Alphabet to reduce its headcount and cut costs. Morgan Stanley’s Brian Nowak lowered his price target on Alphabet from $135 to $125 last month. However, he maintained his Overweight rating, noting that “outperformance may require patience.” Meanwhile, Disney, which captured Wall Street’s expectations for revenue and earnings numbers, is also on Morgan Stanley’s list. The company reiterated its overweight position on November 21 after Bob Iger returned to the CEO post at Disney . Shares are down 36% in 2022. “Bob Iger has an opportunity to finish what he started – to transition Disney’s media businesses from legacy distribution to streaming, quickly, profitably and in the face of increasing cable breakage,” analyst Benjamin Swinburne wrote in a research note. Iger’s comeback “improves the risk/reward tradeoff in DIS stock,” he added. Advanced Micro Devices also caught the attention of Morgan Stanley. The semiconductor stock underperformed Wall Street estimates for earnings and sales per share in the third quarter and issued fourth-quarter revenue guidance that fell short of expectations, according to FactSet. Stocks took a hit in 2022, falling 47%, but Morgan Stanley remains positive. “Continued PC weakness in 4q is weighing on numbers and the dust hasn’t fully cleared yet, but modest data center growth in 4q should be a relief,” analyst Joseph Moore wrote in a Nov. 2 note. “We like the stock for server earnings next year.” -Michael Bloom of CNBC contributed to this story.
