Morgan Stanley: 81 companies will have technical pressures due to tax loss selling

More than 80 stocks were identified by Morgan Stanley as potentially having technical pressure due to tax loss selling.

A Morgan Stanley U.S. Equity Strategy report, published on Monday, showed 81 stocks that could have performance pressures due to market selling because of tax losses in the fourth quarter, when the taxable year ends for many investors.

The list, ran through the S&P 1500 index, identified first which stocks were likely favored and widely held among investors earlier in the year (Jan 15) and which had absolute price returns that would generate meaningful tax losses.

MS identified stocks that saw at least a 10% drop in price from mid-January through the end of September and limited the downside to 25% since those stocks with the biggest price drops tend to show some rebound in the fourth quarter, the report said.

The biggest sector the list has is health care, including equipment and services, and biotechnology and life sciences.

Those are: Acadia Healthcare Company (ACHC), Addus HomeCare Corporation (ADUS), AMN Healthcare Services (AMN), Apollo Medical Holdings (AMEH), Centene Corporation (CNC), Certara Inc. (CERT), DexCom Inc. (DXCM), Enovis Corporation (ENOV), Envista Holdings Corp. (NVST), Privia Health Goup (PRVA), QuidelOrtho Corporation (QDEL), Arcus Biosciences Inc. (RCUS), Azenta Inc. (AZTA), Bio-Rad Laboratories Inc. Class A (BIO), Bio-Techne Corporation (TECH), Charles River Laboratories International (CRL), Collegium Pharmaceuticals (COLL), IQVIA Holdings (IQV), Jazz Pharmaceuticals Public Limited Company (JAZZ), Ligand Pharmaceuticals (LGND), Pacira Biosciences (PCRX), Perrigo Co. Plc (PRGO), Prestige Consumer Healthcare (PBH), Repligen Corporation (RGEN), Thermo Fisher Scientific (TMO), and United Therapeutics Corporation (UTHR).

In the communication services sector, MS identified three stocks: John Wiley & Sons Inc. Class A (WLY), Nexstar Media Group (NXST), and Walt Disney Company (DIS).

For consumer discretionary: Gentherm Incorporated (THRM), Academy Sports and Outdoors (ASO), Five Below (FIVE), Haverty Furniture Companies (HVT), LKQ Corporation (LKQ), Dave & Buster’s Entertainment (PLAY), Monarch Casino & Resort (MCRI), Services Corporation International (SCI), and Strategic Education (STRA).

Two in consumer staples: Darling Ingredients (DAR), and Vector Group (VGR).

Two in the energy sector: Talos Energy (TALO), and World Kinect Corporation (WKC).

For the financial sector: Atlantic Union Bankshares Corporation (AUB), East West Bancorp (EWBC), Preferred Bank (PFBC), Webster Financial Corporation (WBS), Wintrust Financial Corporation (WTFC), Affiliated Managers Group (AMG), Walker & Dunlop (WD), Mercury General Corporation (MCY), and MetLife (MET).

In industrials: Boeing Company (BA), Middleby Corporation (MIDD), ABM Industries Incorporated (ABM), CSG Systems International (CSGS), Forrester Research (FORR), Heidrick & Struggles International (HSII), Insperity (NSP), and Paycom Software (PAYC).

In information technology: ACI Worldwide (ACIW), Agilysys Inc. (AGYS), EPAM Systems (EPAM), OneSpan (OSPN), Perficient (PRFT), Benchmark Electronics (BHE), and Corning Inc. (GLW).

Two in materials: Hayness International (HAYN), and Sensient Technologies Corporation (SXT).

In real estate: Alexander & Baldwin (ALEX), Armada Hoffler Properties (AHH), Chatham Lodging Trust (CLDT), Essential Properties Realty Trust (EPRT), Independence Realty Trust (IRT), Rexford Industrial Realty (REXR), VICI Properties (VICI), and CBRE Group Inc. Class A (CBRE).

The last five are in utilities: CenterPoint Energy (CNP), DTE Energy Company (DTE), IDACORP Inc. (IDA), Middlesex Water Company (MSEX), and NiSource (NI).