Tax-related selling could set up these 11 stocks for big gains early in 2026

By Michael Brush Insider share ownership and corporate profitability are key to finding stocks that have been temporarily sold off Every December, a natural market dynamic creates bargains in the stock market. It's called tax-loss selling. Investors sell their losers to lower their capital-gains tax burden - harvesting losses to offset gains. They did quite a bit of tax-loss harvesting in 2025 because they have a lot of gains from the U.S. market. Investors can take advantage of this dynamic by purchasing shares of quality companies that were temporarily suppressed by 2025 tax-related selling pressure. Early in 2026, these stocks should start to recover, since the selling pressure is gone and value investors buy these names. These stocks won't necessarily rebound in the first few trading days of the year. Rather, it would be a gradual process over a few weeks. Looking for quality The catch here is how to define "quality" companies. To do this, we x-rayed the market to screen for the best potential candidates, using insider ownership of at least 20% of the outstanding stock as a top criteria. Corporate insiders including C-suite executives and directors know their companies the best. So when they own a lot of stock, it suggests positive changes in the business ahead that should drive their stocks higher. To amplify the insider ownership signal, the screen focused on companies where there's been net insider buying in the past three months. Next, all money-losing companies were eliminated, concentrating on those that Wall Street analysts expect will show decent 2026 earnings growth. A company's stock also had to be down around 15% or more in 2025 to ensure that there should be some tax-loss selling at year end. Eleven companies made the cut. One thing clearly stands out about this list: It is primarily a collection of economically sensitive companies that should do well if economic growth continues. One market analyst who's counting on that is Ed Yardeni of Yardeni Research. He cites positive catalysts including a resilient consumer, ongoing solid capital spending by companies and higher refunds this tax season that would be spent in 2026. Two tech companies In technology, two software names appear on the list, trading at reasonable valuations of 17-18 forward price-to-earnings ratios. Certara (CERT) provides software that helps biopharma companies develop drugs. The company's third-quarter sales advanced 10%. The other tech name is Freshworks (FRSH), which offers AI-powered customer support and employee-management software products. Third-quarter sales grew 15% and the company projects 16% sales growth for the full year. This implies a price/earnings-to-growth ratio of just over 1.0. Two consumer names Despite their gloomy sentiment on the economy, U.S. consumers keep spending. This benefits two consumer-facing names on the list of tax-loss-selling candidates. One is Pursuit Attractions & Hospitality (PRSU), which manages lodges, restaurants and retail outlets in exotic travel destinations in the U.S., Canada, Iceland and Costa Rica. The company posted 32% third-quarter sales growth and raised its guidance for the year. The other stock to watch is Gogo (GOGO), which offers satellite-based in-flight broadband service. Basic industry Economic growth helps companies in basic industries such as heavy machinery, energy and chemicals. Reasonable 2026 growth should support three names on the list: CNH Industrial (CNH), which sells farming and construction equipment; Kinetik Holdings (KNTK) in energy pipelines and storage; and LyondellBasell Industries (LYB) in chemicals production. A Wall Street name On average, Wall Street strategists predict the S&P 500 SPX will finish 2026 with a gain of 9% to 10%, according to Yardeni Research. If they're right, that will be good news for stock-market-related investment-management companies, including Cohen & Steers (CNS). An anti-GLP-1 play As more people use GLP-1 weight-loss drugs like Ozempic and Wegovy, the shares of companies selling high-carb, high-calorie foods are suffering. Insider buying has been active recently in several stocks in this space, suggesting that investor negativity on junk food is overdone. One tax-loss-selling rebound candidate is J&J Snack Foods (JJSF), which sells pretzels, funnel cakes, frozen drinks and other snacks. Defensive names Two defensive consumer staples names round out the list. One is Coty (COTY), which sells cosmetics and fragrances. The other is Primo Brands (PRMB), which sells water brands Poland Spring, Pure Life, Saratoga and Deer Park. These names could provide ballast to the tax-loss-selling candidate portfolio. If the economy struggles, consumer spending on basics like beauty products and water should hold up, supporting the shares of these companies. Here are the 11 stocks that passed the tax-loss-selling screen. You might need to scroll through the table for flip your screen to landscape mode to see all the data, including the percentages of insider ownership in the rightmost column. Michael Brush is a columnist for MarketWatch. At the time of publication, he had no positions in any stocks mentioned in this column. Brush publishes the stock newsletter Brush Up on Stocks. Follow him on X @mbrushstocks More: This winning fund manager spills 4 secrets about smart ways to buy non-U.S. stocks Also read: Here's the tech stock that could set the pace for 2026, and it's not even a U.S. company -Michael Brush This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 01-02-26 1522ET