Every December, tax-loss selling puts downward pressure on certain stocks, as investors look to offset capital gains. CIBC Capital Markets chief market technician Sid Mokhtari says this opens up a seasonal opportunity for “bargain hunters” looking for end-of-year discounts on beaten-up equities with sturdy fundamentals.

Canada’s main stock index (^GSPTSE) is nearing the end of a strong performance in 2025, rising nearly 27 per cent year-to-date. Materials and financials have been the top-performing sectors, with the former benefiting from soaring gold prices. Bank stocks have booked double-digit gains this year, backed by strong earnings amid improved lending conditions.

“2025 has been particularly strong for the TSX stocks, which may make tax-loss harvesting a viable strategy for investors,” Mokhtari wrote in a recent research report.

“There is no exact date for tax-loss selling, but anecdotal evidence suggests that most selling activity tapers off by mid-December, during which time bargain hunters may opt to use the weakness as an opportunity to pick up candidates that are trading near their 52-week lows.”

The last trading day to book losses for the 2025 tax year is Dec. 30. Investors cannot buy the stocks they sell for tax-loss purposes within 30 days of a sale in order to have the loss applied to their capital gains.

Mokhtari highlights six companies which he says are “fundamentally ranked as sector Outperformers and, in our view, appear on sale from a positive mean-reversion perspective.” They are Boralex (BLX.TO), Brookfield Asset Management (BAM.TO), Constellation Software (CSU.TO), FirstService (FSV.TO), TFI International (TFII.TO), and Thomson Reuters (TRI.TO).

Back in October, CIBC Capital Markets screened a larger list of TSX-listed stocks that may be affected by tax-loss selling pressure during November and December. The bank says the following list of 40 stocks includes some additions and deletions since then.

Mokhtari specializes in technical analysis. His team recently published a list of 10 TSX stock picks for December 2025.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist.