This is the time of year when everyone is going to start looking for tax loss candidates to buy hoping for a quick recovery in the early weeks of 2014.
While the idea has some merit, a better approach might be to look for those stocks that have done very well and have the type of solid fundamentals that attract institutional buying pressure. In a year when the markets have rallied sharply, stocks that are down big like JC Penney (JCP) and Blackberry (BBRY) have performed poorly for a reason. They have poor fundamentals and a very uncertain outlook that is unlikely to attract buyers as the market advance continues to thin out.
Instead, you should look for the stocks that continue to build on solid fundamentals, with help from Portfolio Grader.
Shares of Boston Beer (SAM) have had a very good 2013 and have doubled in price so far. Conventional wisdom might tell you to take gains in the stock, but the truth is that fundamentals of SAM are still excellent. Analysts are still raising their estimates for both 2013 and 2014, and the company is showing excellent sales and earnings growth. The brewer is still seeing excellent consumer preference for its Sam Adams beer and Twisted Tea malt beverages. SAM stock was upgraded back in August and remains a “strong buy” as we head into the end of the year.
Sports bar chain Buffalo Wild Wings (BWLD) has had a stellar year, and BWLD stock price has gained more than 100%. It looks like the company will roll right into 2014 on a tear that should continue as people head out to watch all the Bowl games and NFL playoffs. Sales and earnings momentum are excellent, and the analysts are racing to catch up as a result of the chain’s success. BWLD has posted two consecutive earnings surprises, and estimates have been raised for the final three months of this year as well as all of 2014. The stock was upgraded to an “A” in November and remains a “strong buy” at the current price.
Another stock that has had a great year in 2013 is Taser (TASR). The company has seen strong order flow from military and police customers this year, and sales and earnings have just exploded along with TASR stock price. TASR stock price has doubled, but the earnings have more than tripled so far in 2013. Business has improved so rapidly that analysts have been caught flatfooted, and the company has posted three consecutive positive earnings surprises. The company is also seeing strong orders from police departments around the country for the new wearable cameras that have helped curb complaints and resolve accusations of bad behavior by officers. The stock is rated “B” by Portfolio Grader and remains a “buy.”
Buying stocks that are down in hopes of a bounce can lead to a portfolio full of companies whose fundamentals not justify investment right now. Rather than guess on a rebound, try to load your portfolio with shares of companies with strong fundamentals that are likely to attract buying pressure and continue moving higher in the new year.
Louis Navellier is the editor of Blue Chip Growth.