It's been a long year -- and, for most growth investors, a surprisingly lucrative one. Things will inevitably get better in 2021 in terms of tackling the pandemic and bouncing back from the economic funk, but not all stocks will go along for the ride.
Norwegian Cruise Line (NCLH 7.53%), Blink Charging (BLNK 3.42%), and Yelp (YELP 1.37%) are three stocks investors may want to avoid in the year ahead. Let's take a closer look at why these three stocks may let you down in 2021.
Norwegian Cruise Line
Cruise lines have understandably been slammed in 2020. The industry was shut down in March when ships became a hotbed for the COVID-19 outbreak. As the smallest of the three top players in the industry, Norwegian Cruise Line has been hit particularly hard. The stock has shed more than half of its value in 2020. Don't make the mistake of assuming that it can more than double in 2021 to get back to where it was just two years ago.
With negligible revenue, a nine-figure monthly cash burn rate, and the highest cash refund request rate among its peers, Norwegian Cruise Line has had to raise a lot of money in 2020 just to stay afloat. There's a price to pay for all of the new shares and debt here. The stock may have plummeted 57% this year through Monday's close, but Norwegian Cruise Line's enterprise value has only dipped 9% in that time -- from $18.3 billion at the beginning of 2020 to $16.6 billion now.
Norwegian Cruise Line expects to start sailing again in March, but we've seen that line in the sand get redrawn whenever the waves wash it away. Norwegian Cruise Line is going to take several years before approaching where it was pre-pandemic, and it's a lot less than 91% of the company it was a year ago.
Let's go from one of this year's coldest stocks to one of the hottest investments. Blink Charging is a 25-bagger in 2020. The operator of charging stations for electric vehicles has been a rocket, riding the hype of eco-friendly vehicles in need of some juice to keep rolling.
The problem with Blink Charging is that the company isn't as big as its market cap. Blink Charging has just $4.5 million in trailing revenue and no shot at turning a profit anytime soon. This is not a $1.5 billion stock. The demand for charging kiosks will continue to grow, but this is going to be a cutthroat market with reality failing to live up to the hype.
I'll close on a less controversial pick. Betting against Norwegian Cruise Line and Blink Charging in 2021 is going to ruffle some feathers, but is anyone really rooting for Yelp anymore? The online aggregator of reviews for local businesses and experiences is struggling this year, with its shares sliding 11% in 2020.
Revenue is declining for the first time in Yelp's history. Even the businesses that are surviving the pandemic are paring back their online marketing spend. The COVID-19 crisis isn't the only problem at Yelp. Revenue growth is decelerating for the seventh year in a row, slipping to less than 8% top-line growth last year. If Yelp was having monetization challenges even in 2019's booming economy, it's going to be a long road back. Bulls will argue that Yelp will be an important tool for local businesses as the economy reopens, but enterprises were already shifting away from Yelp as a lead generator.
If you're looking for safe stocks, you aren't likely to find them in Norwegian Cruise Line, Blink Charging, and Yelp in 2021. You may want to avoid them.