Which stocks could be hit by tax loss selling as end of financial year looms?

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With less than a month to go of the 2019-20 financial year, time is running out for share market investors to minimise their tax bill.

One way is by selling stocks investors have made a loss on and claiming them as an offset against any capital gains made. However, they cannot be directly claimed back in a similar way to tax-deductible expenses.

Of course, even if you do not have capital gains to claim losses against, you may want to “get out” to minimise losses before a selling spree begins.

How can you tell what stocks may fall victim to this? An easy target is small caps that have made the biggest losses in the financial year.

Here are the worst performing ASX small cap stocks this financial year (excluding recapitalised stocks):

Swipe or scroll to reveal the full table. Click headings to sort.

Some stocks on this list have witnessed problems specific to their companies.

For instance construction provider Decmil (ASX:DCG) made a $75 million half yearly loss after money stopped flowing from a couple of clients.

X-ray dye reduction tech stock Osprey Medical (ASX:OSP) has been bleeding cash while struggling to make money from its technology.

Pot stock Elixinol (ASX:EXL) has struggled with cash flow problems and a revolving door of executives.

Others are in industries that have been decimated pre-COVID-19. For example, semiconductor makers globally struggled throughout 2019 due to the US-China trade war and have been further hit by factory shut downs.

BluGlass (ASX:BLG) is one such stock, down 82 per cent in the last 11 months.

While oil prices are recovering from the brief plunge into negative territory, they are still below levels seen prior to 2019, impacting small caps such as Liquified Natural Gas (ASX:LNG) and Otto Energy (ASX:OEL).

The more recently hit

While the above list of stocks are the most extreme losses, almost all stocks plunged between late February and late March as markets came to terms with the COVID-19 disruption.

Many stocks have been on the rise again but others have failed to regain ground. 34 stocks are still sitting at least 60 per cent below their February 20 price, despite the market climbing for 2 months.

Some of these stocks may recover as COVID-19 restrictions are eased. But an immediate ‘return to norm’ is far from likely and the impact will be felt for months to come.

While all tourist stocks were hit, theme park operator Ardent Leisure (ASX:ALG) has copped the greatest hit.

Many theme parks are expected to open when restrictions are eased, but the company has not provided to the ASX an indication about when this will occur.

US-domiciled med-tech GI Dynamics (ASX:GID), which struggled to regain lost ground after the COVID-19 crash, announced in early May it would be delisting.

Aged-care focused tech play Hills Holdings (ASX:HIL) told shareholders in March it anticipated demand to plunge, at least temporarily, as budgets were tightened.

Since then it has only updated the ASX once, in late April, where it reiterated the immediate outlook appeared deeply uncertain and it would do everything to protect the business.

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