Tax-loss selling occurs as investors dump their underperforming stocks to take the capital loss and wait 30 days to buy them back to avoid the wash rule. This causes underperforming stocks to fall in December and bounce back in January and February as investors buy back into the same shares. The weak performance and fundamentals make these stocks higher risk investments, but double-digit bounces are not uncommon, especially with lower-price stocks. Here are three more tax-loss selling buy opportunities for risk-tolerant investors and speculators to consider. These stocks fall into the Retail, Auto/Tires/Trucks, and Medical sectors.
Purple Innovation Inc. (NASDAQ: PRPL)
Often referred to as Purple, this sleep technology company uses its GelFlex Grid technology to make the "World's First No Pressure Mattress ."They also sell sleep accessories, including pillows, cushions and various other products. The seat cushions and mattresses are colored Purple. The soft but firm squishy waffle-like gel holds its shape, providing solid support and pressure relief with breathability. Some of its Purple mattresses have additional technological innovations like temperature control and adjustable comfort zones. The retail stores are located in shopping malls, competing with mattress manufacturers Tempur Sealy International Inc. (NYSE: TPX) and Sleep Number Co. (NASDAQ: SNBR).
PRPL shares are down 80% year-to-date (YTD). The company has implemented its Path to Premium Sleep strategy, which launched the Sleep Better Live Purple marketing campaign in the quarter, resulting in 22% more search traffic.
Falling by the wayside
Purple reported its Q3 2023 results on November 9, 2023. The company reported an adjusted net loss of 18 cents or $19.4 million, compared to a profit of $2.5 million in the year-ago period. Net revenues fell 2% YoY to $140 million but increased 18.8% sequentially. Direct-to-consumer revenues fell 5.2% compared to an increase of 17.8% in the year-ago period. Gross margins fell to 33.8% compared to 41.3% in the year-ago period. The company closed the quarter with $26.6 million in cash and cash equivalents. Check out the sector heatmap on MarketBeat.
Seeing the empty glass as half full
Purple CEO Rob DeMartini was optimistic in his comments, "Our third quarter top-line performance demonstrates that our Path to Premium Sleep strategy is gaining traction." He continued, "Since launching our innovative new mattresses and enhanced brand campaign in May and converting the majority of our retail partner floor sets to our new premium and luxury collections over the past several months, we've seen a steady improvement in demand for Purple mattresses despite ongoing industry softness." He noted that one-time costs associated with its new product transition, including its Luxe line of premium mattresses, have pressured the bottom line.
Purple Innovation analyst ratings and price targets are at MarketBeat. Shopify peers and competitor stocks can be found with the MarketBeat stock screener.
Daily MSH gap-fill
The daily candlestick chart for PRPL illustrates a market structure high (MSH) breakdown triggered under $1.03 with a potential downside gap fill. PRPL rallied from its Q3 2023 earnings from 54 cents on November 10, 2023, to a high of $1.39 on December 6, 2023. The daily market structure low (MSL) buy triggered the breakout through 67 cents. The daily relative strength index (RSI) is falling to the 50-band. Pullback support levels are at 79 cents, 54 cents, 48 cents and 38 cents.
CarParts.com Inc. (NASDAQ: PRTS)
The name of the company says it all. CarParts.com is a leading aftermarket seller of automobile parts. It's a one-stop shop for vehicle repair and maintenance needs. Everything from interior accessories to brakes, wheels, tools, fuel pumps, catalytic converters and headlights can be found on the site. Users can shop by popular makes and brands. You can select the make, model, year and sub-model, and it will take you to a page with all the available parts and accessories in the blink of an eye.
Highest third-quarter sales
CarParts.com reported a loss of 4 cents, beating analyst estimates by 2 cents for its third quarter of 2023. Revenues rose 1% YoY to $167 million, marking the highest third-quarter sales in company history. Gross profits fell 2% to $54.8 million. Net loss was $2.5 million. Adjusted EBITDA was $3 million compared to $6.3 million in the year-ago period. The company bought back 245,000 shares for $1.1 million in the quarter. The company closed the quarter with $66.7 million in cash with no revolver debt.
CarParts.com CEO David Meniane commented, "Today we reported our 15th consecutive quarter of year-over-year growth with $167 million in revenue, up 17% on a two-year stack. We generated strong unit growth, and I'm proud of the results despite a softening consumer environment. We believe that as consumer confidence rebounds, we will be well positioned to support them with the parts and resources they need." The company had 70,000 downloads of its app, generating $2 million in revenues.
CarParts.com analyst ratings and price targets are at MarketBeat.
American Well Co. (NASDAQ: AMWL)
Telehealth platform provider American Well Co. connects providers and patients, enabling virtual consultations and remote patient monitoring. It also provides billing, scheduling, and administrative tools to support telehealth operations for healthcare organizations. The Amwell Platform enables healthcare service providers to deliver services remotely. Amwell's clients include health systems, insurers and medical providers. The company competes with other platforms, including Teladoc Health Inc. (TDOC). The company is migrating clients to its new Converge platform. The company generates revenues from subscriptions and visit fees. The company received a new opportunity with the United States Defense Health Agency's First initiatives across the Military Health System.
Hemorrhaging cash
Amwell continues to bleed money, reporting a loss of 48 cents per share in Q3 2023. Net loss was 137.1 million, compared to $93.5 million in Q2 2023. Net loss reflects non-cash goodwill impairment charges of $78.9 million in Q4 and $27.3 million in Q2 2023. Adjusted EBITDA was negative $38.5 million, an improvement compared to negative $45.3 million in the year-ago period.
Revenues fell 10.5% to 61.92 million versus $63.19 million analyst estimates. Subscription revenue was $28.4 million, and Amwell Medical Group (AMG) visit revenue was $26.7 million. Gross margins were 35%. Total visits were 1.4 million in the quarter. Converge visits grew to 50% of total visits, up from 43% sequentially.
Cash and flat forecast
The platform has 104,000 total medical providers. The company closed with $418.1 million in cash and short-term securities. Full-year 2023 revenues are expected between $257 million to $263 million versus $259.63 consensus analyst estimates. AMG visits are expected to be between 1.525 million and $1.575 million.
$180 million DHA contract
Amwell CEO Ido Schoenberg commented, "With the Leidos partnership, Amwell was selected to power a multiyear transformation as part of DHA's digital-first initiative. This award followed a rigorous data-driven evaluation process, and our converged solution emerged as uniquely qualified."
He continued, "The award demonstrates our market leadership position is an enabling digital transformation partner. It also extends our TAM, expanding our reach into the government and public sectors." The contract is expected to generate up to $180 million. After the initial phase, the enterprise rollout will make the U.S. government one of its largest customers with "very substantial" weight in recurring software revenue.
American Well Co. analyst ratings and price targets are at MarketBeat.
