Fund managers and stock experts love talking about hot stocks and the ones that are about to blast off.
But what about the stinkers?
We know not all ASX shares can be winners. Starting and maintaining a successful company is very difficult — otherwise, everyone would do it.
For many investors, the end of the financial year is a time to review their portfolios. They might consider pruning some of the losers or cashing in some of the winners before June 30.
There is a tax benefit to cutting the losers.
Any loss you cop from selling a share for less than what you purchased can be offset against the gains reaped from the winners. This reduces the overall capital gains tax liability for that year.
Three well-known ASX stocks that have disappointed shareholders in the past year were Nuix Ltd (ASX: NXL), AMP Ltd (ASX: AMP) and Pushpay Holdings Ltd (ASX: PPH).
Berman Invest chief investment officer Julia Lee this week indicated whether she would keep or dump each of them ahead of June 30.
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AMP just gets worse, but…
AMP shares were trading at $1.18 on Tuesday afternoon, which is 33% lower than 12 months ago. The stock has lost almost 80% of its value in 3 years.
"The only reason you'd be holding onto AMP is because it's up for sale," Lee told SwitzerTV Investing.
"You'd be hoping that AMP Capital gets a good price. AMP is probably worth about $1.50… There is potentially some upside there."
The unfortunate situation for AMP shareholders, according to Lee, is that the company keeps losing value as time passes because customers continue to take their money out.
"The longer this drags on the more painful it gets… but I think for the time being you'd be holding out still hoping for a bid."
Nuix is the worst (no buts)
The software company has been in the headlines this year for all the wrong reasons.
After a spectacular ASX debut in December, Nuix shares were as high as $11.86 before a series of downgrades and corporate scandals have seen investors flee.
On Tuesday afternoon they were down another 1.7% to trade at $2.60.
With inflation and interest rate fears looming, Lee suggested investors' money could be directed elsewhere — even within the same sector.
"Nuix still looks like it's coming under a bit of pressure," she said.
"If you're investing in the tech space, I'd probably go with the best rather than the worst. And Nuix is the worst at the moment."
Pushpay's market is now 'saturated'
Pushpay produces software that manages donations for charities. The product's major market is among churches in the US.
The shares were trading for $1.66 on Tuesday afternoon, which is more than 18% down in the past year. It's nearly 27% down from its 52-week high.
Lee has serious concerns about the potential clientele left to conquer.
"Pushpay did really well because it was winning these big contracts out in the US. But I think it's [now] really saturated, that giant church market," she said.
"So now you're looking at them having to sign up smaller churches, which, I think, is a more difficult and expensive task to do. The easy-hanging fruit has already been picked here."
Pushpay would be out the door, added Lee, so the money can be deployed to other opportunities.
"It is going to be harder to fund the type of growth they've seen in the past few years."
What are the alternatives?
If you prune these shares from your portfolio, where should the newly freed capital go?
Lee made a couple of suggestions.
"I like G8 Education Ltd (ASX: GEM) because the strength of the jobs market means that more people will be looking for childcare," she said.
"Still looking relatively cheap, around that $1.03 mark."
G8 shares were trading at $1.04 on Tuesday afternoon. They're down 13.75% on the year but have risen 11.29% in the past 12 months.
A less stressful takeover play than AMP, Lee suggested, is finance software maker Iress Ltd (ASX: IRE).
"In terms of the UK it does have leading positions in some of its products," she said.
"Although its major product here in Australia and New Zealand has been declining, there is still some potential there from a technology perspective."
As of Tuesday afternoon, Iress stocks were going for $13.08. That's 22% up this year, and about the same for the past 12 months.
The shares were languishing in the low $10s earlier this month, just before the market found out about a potential buyout.
