It's the time of year when investors do their tax-selling , selling securities at a loss to offset taxable gains from other investments.

These sales must take place before Dec. 31, and they can cause the price of stocks to drop much lower than they would otherwise. The anticipated result for the investors who are selling is a reduction in their tax bill, but for everyone else, tax-selling can create a bargain bin of stocks to pick up for the new year.

Stockpickr has reviewed the stocks on the New York Stock Exchange and compiled a list of those with the biggest drops for 2008. These stocks all have P/E ratios below 14 and PEG ratios below 1.

One of the stocks on the list is Boyd Gaming (BYD), which owns and operates 15 casinos in various states, including Nevada, Illinois, Indiana, Louisiana, Mississippi and New Jersey. The stock was downgraded to sell by TheStreet.com Ratings a couple of weeks ago, creating a further bargain in the stock. The stock is down about 86% from the beginning of the year, dropping from above $29 per share to less than $5 per share today. The stock has a P/E ratio of 15, which is unfortunately a bit high compared with the industry average of 12.5. Its PEG ratio is a good low 0.4, much better than Las Vegas Sands' (LVS) PEG of 1 and MGM's (MGM) PEG of 0.7.

Boyd is owned by Bruce Sherman, CEO of Private Capital Management, who was featured in the book Investment Gurus by Peter Tanous. Sherman's fund has had an average annual return of 20% since inception. Private Capital also owns Hewlett-Packard (HPQ), which has dropped about 28% for the year; Symantec (SYMC), which is down only 17% year to date; and Hearst-Argyle Television (HTV), which also tanked this year, dropping over 75%.

Another stock that has taken a heavy hit is Oshkosh (OSK), which makes and sells specialty vehicles and vehicle bodies, including vehicles for the Defense Department and fire trucks. This stock is down about 80% year-to-date. Last month, Oshkosh won a $51 million government contract to provide 660 armor kits used to protect heavy Army trucks. The stock has a P/E of 8, which is right in line with the industry average. The PEG ratio of the stock is 0.4, and it pays a yield of 4.8%.

Oshkosh shows up in the portfolio of T. Rowe Price New Horizons Fund, which is rated three stars by Morningstar and is managed by John H. Laporte. The fund has ranked in the top 24% of funds in its category of small growth funds for the last five years. It also owns NII Holdings (NIHD), which is down more than 46%; FMC Technologies (FTI), which has dropped more than 38%; and Roper Industries (ROP), which is down 27%.

For more ideas, check out Stockpickr's Tax-Selling Stocks portfolio of stocks with the biggest drops for 2008.

Posted on Dec. 22, 2008