With tax-loss harvesting season heating up in the fourth quarter, Wolfe Research found several stocks that could face selling pressure as investors look to lower their tax bills for 2025. "Historically, avoiding the biggest year-to-date losers has been a positive alpha generating strategy heading into the last several months of the year," Wolfe Research said in a note to clients last week. "The market's biggest laggards can be subject to selling pressures by investors looking to harvest capital losses and/or provide 'window dressing' for their annual reports." Tax-loss harvesting refers to the practice of selling assets at a loss, to help offset capital gains from investments sold at a profit. Tax-loss selling typically peaks between September and December, adding more selling pressure to stocks that have already underperformed. Investors probably want to steer clear of, or approach with caution stocks susceptible to being targeted by tax-loss harvesters. To help find such candidates, Wolfe Research screened for stocks with the following characteristics: Market capitalization above $5 billion Share price down 20% or more over the past 12 months or year-to-date Excluded stocks with a two-year gain Here are some of the companies that appeared on the Wolfe Research screen: Lululemon Athletica Lululemon had plummeted 53% year to date and 31%, the biggest loser Wolfe found at the time of its report among consumer discretionary stocks. The Canadian athletic wear maker is down 10% or more in five different months this year after management gave disappointing forward guidance citing mounting macroeconomic uncertainties, including the U.S.-China trade war. Earlier this month, Lululemon forecast full fiscal-year earnings of $12.77 to $12.97 per share, far below Wall Street analyst estimates of $14.40 per share, saying it may be forced to absorb higher production and shipping costs due to higher tariffs. Freshpet Freshpet shares have lost two thirds of their value this year, plunging 67%. The Bedminster, New Jersey-based company twice cut its 2025 sales and profit outlook this year, citing economic concerns that have led consumers to tighten their belts. Fresh Pet also faces mounting competition from General Mills , which plans to deepen its foray into the pet food market . Caesars Entertainment Caesars' shares are trading 21% lower since the beginning of this year and have tumbled 36% over the past 12 months. The casino operator posted a worse-than-expected loss of 39 cents per share in the second quarter, citing softer leisure demand in the Las Vegas market. Caesars also said it has more than $12 billion in aggregate principal debt outstanding, little changed from the end of 2024. Other potential tax-loss selling candidates investors might be wary of
