With only this week remaining in the financial year, investors should be finalising their tax strategy, which includes capital gains tax (CGT) considerations. It’s time for a review of the portfolio, to reduce CGT by selling any non-performing shares that you may be holding. Selling such a stock gives rise to a tax loss that can potentially be handy, if it’s used to offset a capital gain on another share.

Nobody likes making a capital loss on a stock, but the pain can be assuaged by using the loss to soak up a capital gain that you have – hopefully – earned elsewhere. Use the annoying situation of a loss to reduce the ATO’s take of your capital gains.

The most efficient way to do this is to be on top of your ‘parcels’ of shares: to know exactly when you bought various parcels of your shareholding, so you can use the CGT discount for shares held for more than 12 months.

When using a capital loss to offset a capital gain, it’s a good idea to use a capital loss to offset a capital gain on a stock that you’ve held for less than 12 months – where you pay CGT at the full rate – rather than the discounted CGT. That way, you get the full value of the loss offset.

You can always buy a stock back if you really want to hold it for the long term. If you buy it back at a lower price, you’ve lowered the average buying price of your long-term holding.

This means that ideally, you want the stocks you’re selling so as to generate a capital loss to be heading even lower, for when you buy back in.

Here are 5 candidates that you might have in your portfolio that could be worth reviewing:

1. BWX (BWX, $1.97)
Market capitalisation: $245 million
12-month total return: –65.4%
FY20 projected dividend yield: 1.8%, fully franked
Analysts’ consensus target price: $2.06 (Thomson Reuters)

Personal care products company BWX was a market darling for quite some time after its float in November 2015. BWX left its issue price of $1.50 well behind as it surged as high as $7.74, in January 2018. But those halcyon days seem well behind it, for now.

BWX makes, markets and distributes branded natural skin and haircare products, focusing on beauty markets. Its flagship brand is Sukin, the number-one skincare brand in Australian pharmacies, and it is expanding overseas on the back of Sukin, as well as its other main international brands, Andalou Natural and Mineral Fusion.

But as sales of the crucial Sukin brand slumped, the company lost its sheen – most unforgivably, in the eyes of the stock market, BWX revised its EBITDA (earnings before interest, tax, depreciation and amortisation) guidance for FY19 four times in less than eight months. A failed management buyout, and slowing sales to China, did not help, dragging the stock lower.

There is unlikely to be a dividend in FY19 – the interim dividend was canned – and even with an expected resumption in dividends in FY20, the yield is not alluring enough to keep aggrieved investors in BWX.

2. Nufarm (NUF, $4.08)
Market capitalisation: $1.5 billion
12-month total return: –52.9%
FY20 projected dividend yield: 2.7%, unfranked
Analysts’ consensus target price: $5.80 (Thomson Reuters), $6.33 (FN Arena)

Agricultural chemicals maker Nufarm has had a shocker of a year. As if the severe drought conditions in eastern Australia, which have hammered its performance, and supply problems in Europe – which combined to deliver a first-half loss and earnings downgrade – were not enough, Nufarm has suffered collateral damage from court verdicts in the US against agri-chemicals giant Monsanto, over alleged cancer links to glyphosate-based herbicides.

Although Nufarm does not manufacture glyphosate – it buys the material from manufacturers to formulate into glyphosate-based products that it sells –  it has acknowledged the potential for litigation and earnings risk. Glyphosate-based formulations represent 12% of the company’s gross profit. Nufarm has defended the product, saying that it was “satisfied that glyphosate is safe to use in accordance with label directions, including the appropriate safety directives as outlined in each product label.”

The perfect storm of negatives has crunched Nufarm, and although analysts see recovery, it is unlikely that the company has seen the last of court action over glyphosate. The yield is not attractive, and all the way down from $17.24 in May 2008, there would be a lot of shareholders sitting on capital losses that they might now want to use.

3. Blackmores (BKL, $91.03)
Market capitalisation: $1.6 billion
12-month total return: –34.4%
FY20 projected dividend yield: 3.2%, fully franked
Analysts’ consensus target price: $84.50 (Thomson Reuters), $86.04 (FN Arena)

Natural health products heavyweight Blackmores vaulted to the rarefied air of a $218 share price in December 2015, viewed as a huge China growth story. Considering the stock entered the 2000s at $5.20, it was a great investment success story.

Almost two decades later, Chinese sales are struggling, and the company has admitted that it has been bypassed, to an extent – it has failed to develop sufficient new products to keep its Chinese customers, and has had marketing and distribution problems. Blackmores reported a poor first-half for FY19 and warned that its second half profit would fall below its first half result.

The company has also had management problems, with three CEOs in two years; the 73-year-old Marcus Blackmore has returned to the helm of the company that his father Maurice founded. On his return to the top job, Marcus memorably summed up the company as “too fat, too complex and too slow.”

Fundamentally, Blackmores is a good business with a great long-term opportunity in Asia, but it has to rebuild. And the share price appears to be heading lower before that is complete.

4. Bingo Industries (BIN, $2.38)
Market capitalisation: $1.6 billion
12-month total return: –8.7%
FY20 projected dividend yield: 1.3%, fully franked
Analysts’ consensus target price: $2.00 (Thomson Reuters), $2.02 (FN Arena)

Waste management and recycling services company Bingo Industries floated on the ASX in May 2017, after raising $440 million through the issuance of shares at $1.80: the shares peaked at $3.20 in August 2018, but have come off significantly as the market has tried to deal with the pace of the company’s acquisitions and the fact that FY19 earnings guidance was weaker than expected.

The waste collection and recycling thematic is a strong one, and Bingo has a good industry position, which will be improved by the latest acquisition, integrated NSW recycling and waste management services provider Dial-A-Dump Industries. But analysts expect a significant profit fall for FY19, and earnings risk continuing into FY20 – and Bingo does not have a yield that will keep investors’ interest.

5. Costa Group (CGC, $4.05)
Market capitalisation: $1.3 billion
12-month total return: –52.5%
FY20 projected dividend yield: 3.4%, fully franked
Analysts’ consensus target price: $4.43 (Thomson Reuters), $4.66 (FN Arena)

From levels approaching $9 a year ago, horticulture operator Costa Group has slid more than 50% as it has made a series of cuts to its growth and earnings outlook, battling a series of issues in its Australian and Moroccan growing areas, which combined affect its mushrooms, avocado, tomato, blueberry, raspberry and citrus crops. In May the company told its annual general meeting that the operating environment had “deteriorated,” and that profit would be lower than expected. The market has been very sensitive to Costa’s downgrades, and has halved the stock price from a clearly too-optimistic level. Analysts see recovery in the stock price, but there would undoubtedly be a lot of shareholders who are surprised and disappointed by Costa’s 2019 performance so far – and might want to use the loss for some good.