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Several popular seasonal trading strategies are associated with the closing weeks and opening weeks of the calendar year. Bank of America analyst Savita Subramanian recently highlighted three of his favorite trading ideas for January 2023, and it may be good news for Tesla Inc TSLA, Meta Platforms, Inc. META, Match Group Inc MTCH and some of the other worst-performing stocks of 2022.
Tax Loss Candidates: Subramanian said one of his best ideas for January is to buy tax loss stocks heading into the new year. These stocks include some of the worst performers of 2022, which have historically outperformed once the calendar flips over to the new year.
Generac Holdings Inc. GNRC, Match and Tesla are the three worst-performing stocks of 2022, but other market laggards that could see a January bounce include Meta Platforms, PayPal Holdings Inc PYPL and Carnival Corp CCL.
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Dash To Trash Trade: In addition to the worst-performing stocks of 2022, Subramanian recommends the “dash to trash” trade heading into January.
“Since 1986, Low Quality stocks (based on S&P Common Stock Rankings) have outperformed High Quality stocks 80% of the time in Jan although the hit rate is lower after years of S&P 500 losses,” he said.
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Bank of America’s “dash to trash” screen includes stocks like Lumen Technologies Inc LUMN, Viatris Inc VTRS and Carnival.
Finally, Subramanian said investors should dump the most overweight stocks in long-only funds and buy the most underweighted stocks. The firm’s list of most overweight stocks includes Baker Hughes Co BKR, Carrier Global Corp CARR and Royal Caribbean Cruises Ltd RCL. Underweight stocks that might outperform in January include UnitedHealth Group Inc UNH, D R Horton Inc DHI and Johnson Controls International PLC JCI.
Benzinga’s Take: Seasonal trades are far from a guarantee, and traders would be wise to remember these trends are only temporary swings and should not be considered long-term recommendations. In fact, many of the worst-performing stocks in the market have poor performances for good reason and may be regrettable long-term investments.
Photo: Courtesy of Shutterstock.
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Image and article originally from www.benzinga.com. Read the original article here.