A solid stock market performance in the about-to-close
financial year has raised tax bills for many investors. So
selling pressure in the markets is expected to be higher today
than in the last few years.
So which are the ideal stocks that could witness significant
selling pressure? Before we zero-in on a few, let's discuss how
Long-term capital gains are often taxed at a lower rate than
short-term capital gains. Furthermore, such taxes are paid only
on the realization of capital gains (i.e., when the investment is
This is one of the reasons that the stock market often plummets
toward the end of the financial year as investors sell off their
losing positions to offset the capital gains and lower their tax
So stocks that have gained substantially in the past year or so
and look overpriced now may witness selling pressure. Moreover,
investors offload those stocks that have less potential to
We have highlighted three stocks here that saw substantial gains
over the last 52 weeks, but have been witnessing negative
earnings estimate revisions recently. Moreover, they don't have a
favorable Zacks Rank.
Stocks to See Selling Pressure
): This Zacks Rank #3 (Hold) technology stock generated a modest
52-week return of around 14%. However, it started 2014 on a
sluggish note and its performance deteriorated further in
It has delivered two negative earnings surprises in the last four
quarters with an average miss of 152.9%. Moreover, over the last
60 days, 8 estimates for fiscal 2014 were revised downward,
pushing the Zacks Consensus Estimate down by 1.3% to $3.13.
H&R Block, Inc.
): This service sector stock carries a Zacks Rank #5 (Strong
Sell). This is because the stock witnessed four downward
revisions for fiscal 2014 over the last 60 days. The Zacks
Consensus Estimate went down by 3% to $1.62 over the same time
H&R Block has generated a return of 1.41% over the last 52
weeks. Recently, the company has been on a roller coaster ride
with a negative year-to-date return of 4.6%
): Though the stock currently carries a Zacks Rank #5, it
has had a terrific run over the last 52 weeks, scoring a gain of
more than 70%. However, similar to many other technology stocks,
BIDU had a moderate start in 2014 and finally resulted in a
negative year-to-date return of 14.6%.
The Zacks Consensus Estimate for 2014 went down 16.7% to $5.38
with 8 estimates going down over the past 60 days.
So what you are waiting for? If you hold any of these stocks,
this is the right time to offload them. Of course, it depends on
your holding period of these stocks. But in any case, we don't
see these stocks gaining in the near term as they don't have a
favorable Zacks Rank.
BAIDU INC (BIDU): Free Stock Analysis Report
BLOCK H & R (HRB): Free Stock Analysis
INTUIT INC (INTU): Free Stock Analysis Report
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