Investors are dumping losing stock positions in a bid to cut their 2022 tax bills – and that could turn up an attractive buying opportunity for bargain hunters. As the year winds down, investors turn their attention toward a strategy known as tax-loss harvesting in their taxable brokerage accounts. This involves selling off losing positions in your portfolio and then using those losses to offset realized capital gains elsewhere. In particular, the tech sector is looking ripe for tax-loss selling, having fallen more than 23% this year. For investors to claim these losses on their tax returns, they must avoid violating the wash-sale rule . That is, if you sell your investment at a loss and snap up an asset that’s substantially identical to it within 30 days before or after the sale, you won’t be allowed to claim the loss. Morgan Stanley highlighted stocks that may be good contenders that are “ripe for repurchase” after investors have realized their tax losses. The firm screened for names that have dropped more than 20% this year and are rated overweight. “Stocks that have sold-off with positive analyst ratings and favorable outlooks may see a positive bid in the interim,” wrote Todd Castagno, global valuation, accounting and tax strategist at Morgan Stanley, in a Nov. 18 note. Here are 10 names that may be prime contenders for buying, according to the firm. Google-parent Alphabet has tumbled 32% this year. Back in October, the tech stock suffered its worst day since March 2020 after Alphabet missed expectations on the top and bottom lines in the third quarter. Activist investor TCI Fund Management also recently called on Alphabet to cut its headcount and reduce costs. Morgan Stanley’s Brian Nowak cut his price target on Alphabet last month to $125 from $135. However, he maintained his overweight rating and noted that “outperformance may take patience.” Meanwhile, Disney , which whiffed on Wall Street’s expectations for top and bottom lines , is also on Morgan Stanley’s list. The firm reiterated its overweight rating on Nov. 21 after Bob Iger returned to the CEO post at Disney . Shares are off 36% in 2022. “Bob Iger has the opportunity to finish what he started – transition Disney’s media businesses from legacy distribution to streaming, quickly, profitably, and in the face of rising cord-cutting,” analyst Benjamin Swinburne wrote in a research note. Iger’s comeback “improves the risk/reward on DIS shares,” he added. Advanced Micro Devices also caught Morgan Stanley’s attention. The semiconductor stock fell short of Wall Street’s estimates on per-share earnings and revenue in the third quarter and issued fourth-quarter guidance on revenue that came in below expectations, according to FactSet. Shares have taken a beating in 2022, toppling over by 47%, but Morgan Stanley remains positive. “Continued PC weakness into 4q weighs on numbers, and the dust hasn’t completely cleared, but modest data center growth in 4q should be a relief,” wrote analyst Joseph Moore in a Nov. 2 note. “We like the stock for next year server gains.” -CNBC’s Michael Bloom contributed to this story.
