The year 2020 has been nothing short of eventful. The word “unprecedented” has often been used to describe it and certainly, this word is accurate when considering how the coronavirus has impacted many businesses, even very solid and profitable ones. That said, as we approach the end of 2020, there are bound to be opportunities in good businesses that have struggled this year but have prospects to do well if we begin to see an economic recovery in 2021.
Tax-loss selling gives investors a chance to benefit from capital losses on stocks that have not performed so well throughout the year. This is done by claiming capital losses (in a non-registered account) and in turn reducing one’s capital gains tax bill. In addition to this, unused capital losses can be carried back up to three years or carried forward indefinitely.
Following the sale of these ‘losing’ stocks, long-term investors may choose to re-invest in those same stocks at the beginning of the year (or wait at least 30 days) if they continue to show good fundamentals and have strong prospects for the future.
Writing off good companies based on one year of bad performance is not necessarily the best strategy as any company can have good or bad year. With a long-term mindset, investors can capitalize on the lower prices of good businesses.
The Tax-Loss Screener
The table below shows 70 stocks with market caps greater than $100 million, which are experiencing a YTD price change of more than -15.0%, but also have revenue growth estimates for next year greater than +15.0%. These names are likely candidates for tax-loss selling; yet offer good growth prospects going into the New Year.
As always, we would like to remind readers that the companies mentioned or listed in the table above are not necessarily an endorsement or recommendation. Make sure to do your diligence on any names you plan to tax-loss sell.
| Identifier (RIC) | Company Name | Company Market Cap (CAD) |
YTD Price % Change | Estimated 1 YR Revenue Growth | Dividend Yield |
| CNQ.TO | Canadian Natural Resources Ltd | 25,757,046,949.73 | -47.7% | 18.5% | 7.7% |
| SU.TO | Suncor Energy Inc | 23,868,609,926.10 | -63.2% | 19.1% | 5.4% |
| IMO.TO | Imperial Oil Ltd | 13,770,224,497.52 | -45.0% | 24.9% | 4.7% |
| FFH.TO | Fairfax Financial Holdings Ltd | 10,260,910,493.35 | -36.2% | 16.5% | 3.4% |
| BBU_u.TO | Brookfield Business Partners LP | 5,979,222,524.58 | -25.3% | 20.2% | 0.8% |
| GIL.TO | Gildan Activewear Inc | 5,865,930,170.64 | -22.9% | 29.5% | 0.0% |
| CVE.TO | Cenovus Energy Inc | 5,800,265,942.16 | -64.2% | 31.5% | 0.0% |
| AC.TO | Air Canada | 4,450,609,635.00 | -69.1% | 44.7% | |
| HSE.TO | Husky Energy Inc | 3,705,016,393.34 | -64.4% | 21.6% | 1.3% |