Investors will be clearing out their losers as year end approaches, and Evercore ISI says it’s time to buy some of these stocks that are being tossed like “babies in the bathwater.” “2022 is likely to be a year in which tax loss selling, both at the 10/31 mutual fund year-end and into the 12/31 calendar year end, dominates flows,” Evercore ISI strategists write. “As is often the case when hope is all but abandoned, particularly as so many stocks have declined so much from their Pandemic peaks, opportunity awaits.” Three of those “babies” are Airbnb , Snowflake and Splunk. The strategists screened for stocks that underperformed but had promising earnings. The criteria included stocks in the bottom 50 percentile of the Russell 3000 that were down 24.4% year-to-date and 40.8% from pandemic highs. The companies also have positive earnings growth in the upper 50 percentile for 2022 and 2023, as well as positive 2023 earnings revisions. “We believe such names could outperform in a seasonally favorable environment that, as 3Q earnings continue to chug along, supports a Q4 rally,” they noted. Names that fit this criteria in the industrial sector include API Group and Daseke . Other tech stocks on the list include Datadog and ServiceNow. Health care companies Surgery Partners Inc and Veeva Systems also were included. Financial firms include Blue Owl Capital and Western Alliance Bancorp.
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