CRITERION: Time to take stock of your potential EOFY discards

Is it that time of the year again? Yep – it’s time to consider which underperforming shares should be dispensed to the wheelie bin before June 30.

While we would never advocate acting for tax motivations alone, in reality some of the laggards won’t recover and are worth more for their tax losses.

The hard part is working out which ones are in intensive care but are likely to recover – and which ones are in palliative care and could do with a mercy killing.

While your columnist is not advising on what stocks to fold – or hold – here are some ‘likely suspects’ worth your consideration.

With IDP Education (ASX:IEL) shares down 38 per cent over the past year, the tertiary student recruiter and English language tester has learnt a hard lesson about the intersection of politics and the quest for knowledge.

By that we mean the $4.3 million market capitalisation IDP is caught up in a multinational migration backlash, with international student numbers expected to plunge not just here, but in IDP’s other key markets of Canada and the UK.

Management expects overall international student numbers to decline 20-25 per cent over the next 12 months and is “aligning expenses with the near-term revenue outlook”.

As for Star Entertainment Group (ASX:SGR), the only real certainty is that the property-rich company will be restructured and recapitalised. The near certainty is that debt holders will prevail and equity holders will be wiped out.

With the stock already down 50 per cent over the last year, Star looks like a busted flush.

Tabcorp Holdings (ASX:TAH) shares, meanwhile, have lost 40 per cent of their value over the last year and investors are asking what gambling is really costing them.

Those convinced that new CEO and ex AFL supremo Gil McLachlan can pull off a transformative deal or two – perhaps the acquisition of a smaller sports bookmaker – should hang on.

Diversified ag veteran Elders (ASX:ELD) has lost more than 40 per cent of its peak value of April 2022, but has recovered by about 30 per cent over the past 12 months.

May’s half-year results were subdued, partly because graziers shed livestock ahead of a forecast El Nino dry spell which didn’t actually happen. Full-year profit expectations are also off the pace, but management reckons the worst is past.

In the pathology sector, the glory days of millions of Covid tests are well past. Shares in Sonic Healthcare (ASX:SHL) have declined 25 per cent in the last 12 months, while Healius (ASX:HLS) has halved in value

One reason for not pressing the ‘sell’ button is that providers enjoy scale advantages and Sonic is a global leader. Like a blurred CT scan, the Healius picture is clouded because it is in the throes of selling its diagnostic imaging (radiology) unit after spurning a takeover offer.

While Nasdaq AI superstar Nvidia this week became the world’s biggest company, local investors could be excused for thinking the sector is overhyped (or that ASX exponents simply can’t compete with the US giants).

Shares in AI algo trainer Appen (ASX:APX) have lost 80 per cent of their value over the last year, with Google dispensing with its services. Chip maker Weebit Nano (ASX:WBT) and hardware provider BrainChip Holdings (ASX:BRN) have declined 68 per cent and 47 per cent respectively.

Back in the stale old world investors might also consider hanging up on Telstra (ASX:TLS) – down 18 per cent on the year – as it strives to slash itself to greatness. Or is a good’ ol cost purge a reason for holding on?

While tax losses usually can be carried forward indefinitely, tax-loss selling is usually predicated on investors having crystallised profits to offset in the relevant year.

With the broader market up around 6 per cent over the year, hopefully investors actually have a capital gains ‘problem’ to resolve.

Tim Boreham is one of Australia’s best-known small-cap share analysts and business journalists.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision.