The Best and Worst Consumer Goods Stocks of 2020

In this episode of Industry Focus: Consumer Goods, Emily Flippen chats with Motley Fool contributor Brian Feroldi about the best and worst consumer goods stocks of 2020. They discuss some fast-growing stocks which soared last year, and the trends which are driving their growth. They also look at some companies and sectors which lost the most in 2020. Plus, they've got some advice for investors who go bottom-fishing, and much more.

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This video was recorded on Dec. 29, 2020.

Emily Flippen: Welcome to Industry Focus. Today is Tuesday, Dec. 29, and I'm your host, Emily Flippen. Today, I am joined by the cautiously competent clown of compounding calamitous cache, Brian Feroldi, to talk about some of the best performing consumer good companies of 2020.

Brian, I think I did that one well.

Brian Feroldi: Emily, you remain flawless in your perfect execution, and more importantly, happy end of 2020 to you!

Flippen: I would be super-happy that 2020 is now coming to a close, if I wasn't acutely aware of the fact that come Friday, I think [laughs] many of the same issues that have persisted in 2020 will probably still persist at least for the first few months of 2021. But I can't say I'm not going to miss this year.

Feroldi: 2021 will be all about recovery, and we have to start on a rough note, that's OK, because we can tell ourselves it's going to get better [laughs] every month.

Flippen: Well, 2020 wasn't bad for every company. And I know we're going to talk about some consumer goods companies that were the worst performers in 2020, but to start, let's talk about some companies that were the best performers of 2020, because despite how calamitous, I guess -- to steal a word from you -- that 2020 has been for many consumer goods businesses, they've been great for other ones.

So, what I did was I ran a screener, and it was by no means an all-encompassing screener, of companies that are listed on U.S. exchanges that have classifications of either consumer discretionary or consumer staples, and then I picked some of the best performers from that category. So, this will naturally exclude some, include some, that we could debate to-and-fro about whether or not they're really consumer goods businesses. But holding back the limitations of my screener abilities, I was surprised to see many of the companies on the list of best performers in 2020.

So, to kick it off, I think the one that surprised me the most, and I think is maybe the best performer I had on the screen, was Kirkland's (KIRK -12.78%). And Brian, Kirkland's is not the Costco brand that I thought it was, right?

Feroldi: Then I'm confused, Emily, because the only name I know is Kirkland Signature, and they just are the generic version of Costco stuff, but apparently there's a whole other company called Kirkland's, that's smartly riding on Costco's coattails.

Flippen: [laughs] I completely agree. So, Kirkland's is a U.S.-based home decor retailer. You can think of it a little bit like HomeGoods, if HomeGoods was maybe a bit more upscale and had a lot more [laughs] focus on holiday sales. The year-to-date returns for Kirkland's are nearly 1,500%. They rose from $1.23/share at the beginning of the year, to over $19 today, on the day that we're taping on December 29th, really just driven by what many would assume would be pandemic demand for home equipment, right, as we're all investing in the space around us.

But what really surprised me about digging into Kirkland's and why it deserved a 1,500% jump in 2020, [laughs] I didn't get a good answer, really, when looking at it, I think the best explanation for why Kirkland's is one of the best performing consumer goods companies of 2020 is to say that they had the most dismal 2019, that it was going to be significantly harder for them to go down any further. Kirkland's lost 87% of its value just in 2019 alone, so the starting base was particularly low. This was both in part due to sourcing products from China during the trade war, but really just the fact that nobody was shopping at Kirkland's. And I formally apologize to all the loyal Kirkland's fans out there, again, not the Costco brand, this is the home goods retailer. But really, the company was just in the process of rightsizing its business, trying to become profitable when the pandemic hit, and then the pandemic boosted sales a little bit, but really they had just laid off such a large portion of their workforce, rightsized their operations that the best way to explain why Kirkland's deserved to be one of the best performing companies and consumer goods for 2020 was just because they turned around an unprofitable business to have their first quarter of profitability, that wasn't a holiday quarter, since 2016.

Feroldi: Yeah, this is a remarkable bit of a turnaround story. And the ticker here is KIRK. And even after this roughly 1,500% gain, this company is worth about $260 million. So, it just shows you at the lows in 2019, the markets were basically pricing this thing for death. So, if they came around in any way and said, hey, not only are we not going to die, but we're profitable, I understand how that turned the narrative around.

Flippen: Brian, have you ever been to a Kirkland, would you ever shop at a Kirkland's?

Feroldi: I've never been to one, I couldn't tell you anything about the stores, but just for you, Emily, if I see one next time, I will promise I will go into it. But I don't think these -- are these in the Northeast, I don't even know?

Flippen: There're 400 stores across the U.S., so they're spread out. There are a few around the DC area, I checked, just to see if, you know, maybe one day I'll do some stock "research" and go shop around Kirkland's, but I don't know. Even this stellar 2020 that existed, this isn't a business that I think I'm particularly bullish about.

And our next one. So Brian, I'm curious, I don't know if you've done any research into this business, but I'm going to give you the name of one of our next best performers in consumer goods, and I want you to guess what they do; the company is GrowGeneration (GRWG -4.47%)?

Feroldi: Well, it's Emily Flippen asking me about a company with the word "grow" in its title, so I could guess, I could just guess that this was in some way related to the marijuana industry. Would I be correct?

Flippen: You would be correct. But it is not a cannabis grower. So, this is a business listed on a major U.S. exchange, since cannabis is Federally illegal, we don't see any major cannabis operators that are U.S.-based listed on, like, the New York Stock Exchange or the Nasdaq. But GrowGeneration, you could almost call it the Home Depot for cannabis businesses, they're a supplier of hydroponic and other growing equipment, mainly to the cannabis industry. This includes small individuals, so you or I looking to grow hydroponically, whatever it may be, in our backyards or our houses, could shop at a GrowGeneration. But more likely, it's a multistate operator. So, the pureplay cannabis businesses looking to build out equipment, get fertilizer, get the necessary consumables needed to start and grow their business, they go to GrowGeneration. And the year-to-date returns for this unknown small cannabis play is over 830%, rising from $4.21/share to over $39/share. So, it's been a stellar year for GrowGeneration.

If you had to speculate, Brian, why do you think it was so good for GrowGeneration?

Feroldi: Revenue went up a whole lot? [laughs]

Flippen: [laughs] That's a good place to start. I think when I look at the markets today, and some of the best performing companies, there's a lot of drive for revenue growth. So, the amount that investors are willing to pay for a business that is growing in the triple digits has skyrocketed. We've seen it with the recent excitement over a ton of these fast-growing IPOs, valuations that just seem completely insane. I think GrowGeneration got a little bit out of the bag here. It was well-hidden, had an amazing revenue growth at a really attractive valuation at the beginning of the year. So, they had 11 quarters of sequential record revenue growth. So, this is something that didn't just happen in 2020, this is a business that has been rapidly growing even before this year, but it has explosive growth from excitement about the cannabis industry, it's a profitable business, and it's gotten more investor awareness over the course of the year as well. It was added to the Russell 3000 in June, so that kind of excitement, right, the hype that we see building into a lot of these businesses, especially in the cannabis space, has helped out GrowGeneration.

Feroldi: This is a company that I knew nothing about before you added this to the script today, Emily. But as you know, I'm a skeptic of basically anything related to the cannabis or marijuana industry, simply because I don't think I can pick which company is going to "win" or which company is going to become the brand here.

What's interesting about this company is that it's a play on the picks-and-shovels of the cannabis industry, where they don't really care which company grows the fastest, they just want to be the supplier of all the things that you need to grow. That is an angle of investing in the industry that is far more interesting to me than any other that I've seen.

Flippen: We could do a whole show on GrowGeneration, if you let me drone on, but I'll try to keep my thoughts short. I'm a shareholder of GrowGeneration, so I've benefited from this amazing yearly gain. But I will say that it was not the highest conviction company that I own, and I would still say it's not the highest conviction company in my portfolio right now. Obviously, high enough conviction that I own it. But the reason why I have a little bit of hesitation is because I'm not sure there's competitive advantages in the space the way that there is for cannabis companies that, say, hold licenses in states that have limited licenses or have a really strong brand.

So, GrowGeneration, I mentioned earlier, you could say it's the Home Depot of up cannabis. In my opinion, if you own a company like GrowGeneration, you should probably match it with a company like Home Depot, own both, because there are such little competitive advantages in the space, I think if there was a concerted effort from the Home Depots or the Lowe's of the world, to try to compete more aggressively, and for the hydroponics business, it could really threaten GrowGeneration.

That being said, GrowGeneration has had a really successful past, they've made acquisitions of much smaller retailers, which has allowed them to penetrate in markets that have been underserved by big-box home improvement retailers. So, think areas like Oklahoma, it's been a great market for GrowGeneration.

And last note here, again, I could drone on, if you let me, I'll keep it short. Keep an eye out for management, they had an amazing year, but it was not a straight line for GrowGeneration, in part because there was a short report released on the business, really just not attacking the business of GrowGeneration, but attacking the background of the management team. Admittedly, the background, while not as bad as the report makes it out to be, in my opinion, isn't ideal. They don't have a lot of successful business ventures in their past. So, a little less than ideal than we like to see in businesses that we're invested in. But it is an interesting business, I think, when held in a relatively conservative manner [laughs] in an otherwise diversified portfolio.

Feroldi: And the short report definitely didn't hurt investors this year. I mean, this stock has pretty much been straight up-and-to-the-right, and if they continue to put up the numbers that they are, I can see that trend continuing.

Flippen: Yeah, definitely. And it's funny you mentioned that, because short reports against cannabis businesses, in general, haven't been super-successful. I think it's almost like, you know, easy pickings, right, the cannabis industry, it's easy to poke holes in a lot of these businesses, especially when it's not against the businesses, it's a bit against the background or a history, and in this case, investors seem to be willing to overlook GrowGeneration, the same was true for cannabis company Trulieve, so there's a lot of examples as such, and I don't encourage investors to overthink short reports when they come out about businesses. Take them into consideration, if you want to do so, but don't make investing decisions based on one opinion.

Feroldi: The best way that any company can respond to a short report is by producing good results, and if they can produce good results and execute, people will forget about the short report. So, I never take short reports too seriously, because you never know the motives behind them, they're always worth reading over to see if you have missed something in your thesis, but some people get really angry when a short report comes out on a stock that they own. I always take a more sanguine approach and just say, well, if management can execute, I'll eventually be proven right, and if they can't, the short will be proven right.

Flippen: And our last best performing stock of 2020 for consumer goods, this is a business that I think you know much better than I do, Brian, it's Celsius Holdings (CELH -0.04%), they are the maker of these fitness drinks that you may have seen at the shelves of your local retailer, maybe at your local gym or your Walmarts, maybe even on Amazon. They distribute these beverages that are fat-burning beverages, and they have some studies that they cite to back that up. Really just aimed at fitness communities, right, trying to market toward the fitness community.

Their stock year-to-date is up over 780%, rising from $4.75 to over $41. So, it's clearly been an amazing performer. Brian, what are your thoughts on Celsius?

Feroldi: This is a company that has just grown like gangbusters in recent years. And to your point, they produce these calorie-burning beverages that people have just been scooping off the shelves in the last couple of years. What's interesting is that this company has actually been public for over a decade. And basically prior to the last, like, two or three years, it was a train wreck for investors, it was down hugely. But management has seemed to really turn the business around, and revenue has pretty much been straight up ever since. Investors have really taken notice of this company in 2020. And as you said, the returns have just been spectacular.

Their product has been called into question by some people, but that's fairly typical. Another company that comes to mind that's of the same ilk would be Monster Beverage, which has just had question after question about its products, basically ever since it started selling them, but as far as I know, Emily, investors of Monster Beverage have done just fine for themselves over time.

Flippen: It's funny how Celsius and GrowGeneration tie back to each other. I'm going to make this connection. I have to admit I was one of the skeptics on Celsius, in part because of their claims that it burns calories. They have studies that they say cite that drinking a Celsius drink, especially during or before a workout, has calorie burning properties, while other drinks don't. And whenever I hear a company making claims to burn calories, to burn fat to make you lose weight, it makes me nervous.

When I mentioned GrowGeneration management's background, one of the Founders of the business has a background with a company called, I believe, it was Skinny Nutrition, maybe, and they sold a Skinny Water product that made similar claims, that naturally went bankrupt and defunct. So, I feel like there is a history of seeing businesses claiming to make you skinny, although, admittedly, Celsius is not going that far, but claiming to have some sort of health benefits that don't really.

I like the connection to Monster, though, because you're clearly right that Monster's energy drinks making those claims to providing you energy, even if it was just caffeine, were themselves not without controversy, and it's been an amazing business with extremely high cash flow margins. Celsius could be shaping up to be the next Monster, or I don't know, I could see it being Skinny Water too.

Feroldi: And what's interesting about their claims is that even if their claims are a little bit exaggerated, and we have no information, or I have no reason to refute anything that they said thus far, but as long as they aren't doing anything that's marketing in any, say, illegal way or promoting anything that doesn't exist, the important thing is that the consumers [laughs] of their product believe it. And as long as the consumers of their products buy it again and again and believe that it's helping up to have a workout, that could propel Celsius' growth for a long period of time.

Flippen: Good points. And also, the fact that consumers are enjoying buying it, right? They come back; they buy it a lot. You know, Joey Solitro, an analyst here at The Motley Fool, who I personally know has a fridge in his basement that may or may not be filled to the brim of Celsius beverages. But the rapid consumption from consumers has meant that they have some really strong distribution. So, a lot of brand awareness comes from direct purchases from Amazon, but they also have placements in places like Walmart, even Planet Fitness. So, the rapid distribution, I think we saw in 2020 has also clearly helped Celsius. But when you look ...

Feroldi: ... yeah, Joey has been a big supporter of both the product and the stock, and good for him, because this has been a monster winner this year.

Flippen: [laughs] And if anybody hasn't seen Joey, he's a very fit person. So, when somebody like Joey is coming to you and telling you that, you know, they really like a product and it's fitness related, you're probably doing yourself a disservice by not listening to him; even taking the investment advice out of it.

But when you look at these three businesses, Brian, Celsius, GrowGeneration, and Kirkland's and you look at, I mean, crazy performance, all up at least over 700% this year, which is absolutely insane, is there anyone in particular -- it doesn't have to be -- but is there anyone in particular that you think has the best chance of being another outperformer in 2021, or do you feel like the best is still behind most of these businesses?

Feroldi: Well, I have no clue how any of these companies are going to perform in 2021. So, if I was interested in any of them it would be for 2025 and beyond. And viewing through that lens, I would probably go with Celsius, because it's a recurring revenue business model. I think that they have some nice products, they clearly have a brand that they're building and they also have a history of rolling out more and more and more flavors and new products each and every year. And if they can keep that train going for a long period of time, again, the analogy that I'm thinking of is Monster Beverage, where it's going to be probably a very, very bumpy ride, but if they can do what they say they're going to do, I could see the stock continue to go up.

Flippen: Now, let's take a peek at some of the worst performing consumer goods businesses in 2020. It was fun to talk about the good ones, but I bet when you look at some of the worst ones, there may be probably not [laughs] any surprises, but we'll see. I did purposely leave out any businesses that have declared bankruptcy. It felt a little bit cheap, you know, kicking somebody when they're down, [laughs] to include businesses that have filed any form of bankruptcy this year. So, withholding those businesses, when you look at some of the worst performers, Brian, what stands out to you?

Feroldi: Well, I like how we just categorized the first group of performers as just a group, and that would be the cruise liner, so that would be Royal Caribbean, Carnival Cruise, and Norwegian Cruise Line, no surprise these stocks were absolutely crushed in 2020. Their stocks are down 46%, 57%, and 56%, respectively. It doesn't take a genius to kind of figure out why. It's really hard to operate a business when people are not [laughs] allowed to board your ships. We've seen travel stock after travel stock just get crushed this year, because demand for their products has just evaporated, through no fault of their own. When you layer in the fact that these cruise line companies are heavily leveraged, because it takes so much capital to buy one of their ships, and you combine that with a just complete decline in demand, it's understandable why investors have been hurt so far.

The more interesting question is going to be, how long is it going to be before these companies see demand return to normal. We're all hopeful that the vaccine will convince a lot of people to return to their prior spending habits, but will they return to cruise ships, which kind of have a unique risk, in that they are kind of a floating island. So, if somebody is sick onboard, it's really hard to get away. These companies have had problems with all kinds of illnesses in the past being onboard, so COVID just exacerbated that problem. So, no surprise to see that these stocks got hit hard.

Flippen: And when I looked toward the cruise industry next year, over the next three years, I think the big question for me is how quickly does demand come back? I've heard some people say that they think cruises are dead, right, nobody is going to cruise. I disagree with that. We've seen pandemics in the past, maybe nothing to this scale, but we've seen issues in the past impact demand for a number of years before it comes back. And I think the cruise industry is such a specific level of niche entertainment that I don't see it going away entirely.

But I am curious about how long it takes for consumers to reinvigorate their faith in going on a cruise, because there are so many more dynamics at play in the cruise industry then there is, say, on planes. Planes are short, right, you're not stuck with somebody for a very extended period of time to the tune of days and weeks. They're also necessary, and they're somewhat affordable. Cruises are not necessary, right, we're talking about spending thousands of dollars, weeks among people, when many people are laid-off, maybe they don't have the time or the money to take cruises the way they did in the past. How long does it take for our economy to come back after this pandemic? And then how long does it take for people to feel comfortable getting on a cruise ship? So, there's a lot more dynamics, I think, at the cruise industry level that will take a number of years to prove out, that we won't necessarily see in other industries that have been impacted by the pandemic.

So, if you're one of the people who chose to invest in the cruise line, buy it during the 2020 extended dip that we're seeing happen here, just be aware that once cruises start coming back online, if it's next year or otherwise, don't expect for demand to immediately be back to the way it was previously, these are businesses that you'll likely need to hold for, in my opinion, three to five years, to really see the business bounce back to how it was pre-pandemic.

Feroldi: I think that's about right. And I've briefly studied the cruising industry, and I know that the companies are essentially breakeven on selling the cruises themselves, when considering all the costs that they have to endure. The way that those companies really make their money is from spending on the ship when you are a captive audience and you're buying products or you're buying from the restaurants or you're gambling. So, the question is, will that level of demand and spending return, so that investors can actually return to profitability.

Now, the interesting thing here is that the cruising industry, I don't think, is going anywhere. These ships are huge, and they are financed, but it's not like the banks want to repossess these boats, I mean they have so much debt they've used to finance them, but for the bankers to get paid back on these boats, they have to be operated. So they, in a very real way, are depending on Royal Caribbean, Carnival, and Norwegian returning and starting to generate profits from these companies again.

So, as an investor, I am staying way away from these companies, but if you are a fan of cruising, in general, I don't think you have anything to worry about.

Flippen: So, let's talk about another bad performer. This is, maybe it could be a bird, I will say it's a shoe business. And I don't know about you, Brian, but if there's one thing I certainly have not bought a single pair of during the pandemic, it's shoes.

Feroldi: And that would be the company Designer Brands (DBI -2.58%), the stock has also gotten crushed this year, down 53%. If you're not familiar with the name Designer Brands, they own DSW, they own The Shoe Company, they own the Shoe Warehouse, and they own something called Camuto Group, but the long and the short of it is, they are in the shoe business.

And just like we've seen from the coat business and the businesses that cater to work outfits, the demand for shoes and fancy shoes has really dried up in 2020, which is no surprise, because people often buy fancier footwear to show off at work or at social events, both of which they have not needed in 2020. So, in the most recent quarter, this company's same-store sales declined 30%, 30%. Their overall sales dropped by 30%. That led to a decline in gross margin. And they produced a net loss of $41 million. And the company did not have a pristine balance sheet to really absorb this, which has been a big problem. So, even in the most recent quarter, they had about $115 million in cash, but the problem is, they had $274 million in debt. So, it becomes much more difficult to absorb those losses for an extended period of time when you have a debt-heavy balance sheet like this company does.

Flippen: I have to say, when I dug into Designer Brands, I think I expected it to be worse than it was in 2019, right? So, before the pandemic, it meant that everybody was bringing PJ pants and slippers to work, this was a business that wasn't terrible. You mentioned that their balance sheet could have been better, that's clearly the truth. But in 2019, they had revenue growth of over 13%, not bad for a business that sells shoes, especially when it owns [laughs] brands like the Shoe Warehouse, which I can't say I'm particularly bullish on. I don't think this is a business that goes bankrupt the way that we've seen plenty of other businesses go bankrupt during this pandemic, and will likely continue to see in 2021, in years in the future. But at the same time, this isn't one that, if the pandemic never happened, I'm not particularly excited about adding to my portfolio.

Feroldi: I think the demand for shoes will eventually rebound, whether it's 2021 or it's 2022. I do think that demand will return. And I can say that as someone that is married to someone that has a whole lot of shoes and still sees needs to buy more. But I have no clue if that demand return will result in good things for investors, because this company has a lot of problems going on. So, I think it's going to be a tough business for the next couple of years.

Flippen: You better hope your wife doesn't listen to your podcasts. [laughs]

Feroldi: She does not, I assure you. [laughs]

Flippen: [laughs] Okay. And to wrap up, maybe this is also a brand that your wife is familiar with, this is Express, Inc. (EXPR), the last worst performer we have for the consumer goods business. I have to say, I think Express is one that I know we talked about previously, I think it's familiar to many of our listeners. I have never been in an Express store before.

Feroldi: I don't think I have either, but -- maybe I have, because I think they have an Express for men brand, but this is the retailer that has over 500 retail and factory outlet stores, and they just sell a huge variety of clothing. A very similar story here to what we saw with Designer Brands, essentially traffic to their stores just utterly collapsed, and they got hit financially far harder than Designer Brands did. So, in the most recent quarter, this company's comp sales, same-store sales dropped 30%, and their gross profit just absolutely collapsed to basically, I think, to single digits on a gross profit basis. That caused them to produce a quarterly net loss of $90 million. And just like we saw with Designer Brands, only worse, they had a really ugly balance sheet prior to anything like this happening.

In the most recent quarter, they had $107 million in cash; again, their quarterly net loss was $90 million. And offsetting that $107 million in cash is $630 million in current liabilities, $165 million in long-term debt, and $770 million in lease liabilities. They do have another $85 million or so in borrowing facilities that they can lean on, but unless this ship turns around rapidly, this company is going to be in for a world of hurt in 2021.

Flippen: What's even more interesting about Express is that their stock is down over 80% this year alone. So, clearly, as you mentioned, bad year for Express. But that brings them to a market cap of, I think, it's somewhere around $60 million right now. This is a business that owns 500 stores. So, the value per store [laughs] here is pretty destructive. I think it's clear to say that the market is pricing in an actual destruction of value from the continued operations of a business like Express.

When we see the market price in something that low, I would encourage investors not to take that as an opportunity to say, hey, you know, expectations are low, there's an opportunity for them, they have one good quarter, maybe we'll see a bounce back. Typically, when we see [laughs] the market pricing in our destruction, there's only one thing on the horizon, and that's further destruction.

Feroldi: Yeah. And this is a stock that might appeal to some people, because it's actually in penny stock land, where it's trading below a dollar per share, which makes sense, given that, as you said, their stock is down 80% year-to-date. But to your point, the story here is really bad and their balance sheet is really ugly, so investors really need this company to turn around its financial fortunes in a hurry, otherwise this company could be heading toward bankruptcy.

Flippen: Brian, last question. So, I asked the same question to you about Celsius, GrowGeneration, and Kirkland's. It's probably a moot point, I think I know your answer, but for the sake of asking the question. When you look at the cruise lines, Designer Brands or Express, do any of these businesses appeal to you, whether it's 2021 or beyond?

Feroldi: The answer there would be a hard "no," I am not interested in any of these companies. More often than not, when you see a massive decline in a stock, that is because something is deeply wrong and the businesses themselves are in trouble. However, if I was forced to pick one of these to invest in, I would probably go with Carnival Cruise Line for the reasons I said before, which is, I think that the cruise industry will be OK in the long term. I think Carnival Cruise, Royal Caribbean, and Norwegian will continue to survive. And Carnival Cruise is the top dog in the space.

I'm not saying that returns are going to be good for investors, which is why, again, I would not buy the stock for real, but I think the company is going to continue to persist for a long period of time.

How about you, Emily, any of these bottom-fishing work for you?

Flippen: I completely agree with your opinion, these are not businesses I'm particularly interested in owning right now. I would just encourage investors again, one last point here, if you don't mind me getting on a tiny soapbox before we get off. I just want to remind investors that there's value to your money just from time. So, even if you look at these businesses and you think to yourself that a turnaround could be on the horizon, you could say you're cigar butt investing, ask yourself what else you could be putting that money in. Sometimes there's more obvious answers to your question, which is, invest in good businesses and they tend to outperform. So, even if we see a 50% improvement in Carnival Cruise next year or whatever business it may be, ask yourself if you hadn't invested in Carnival Cruise, where else could you have invested? Maybe it's in a business like Etsy, which was, I think, one of the best performers in the S&P 500 throughout 2020. So, the period in which you are holding, say, a cruise line hoping for a rebound, you could have been investing in a business that has just steadily been outperforming over the same period of time.

So, that isn't to say that I think all of these businesses couldn't engage in a rebound, all of them could, maybe Express is less likely, [laughs] but all of them could. I just think that there's more obvious places to invest. So, that's my final thoughts there; none of those businesses particularly excite me.

Feroldi: One of the hardest lessons that I had to learn about investing is winners keep on winning and losers keep on losing. The old me of, say, 10 years ago, would have taken these six stocks and looked at the worst performing, and said, oh, boy! These excite me. The investor that I am today, looks at the top performing stocks and says, oh, these excite me much more. So, I agree with everything you said. If you're interested in any of these businesses, look for the winners that you think can continue winning, not for the losers that you think might have a chance of surviving.

Flippen: Wise words said much nicer than I could say on my own.

Well, Brian, as always, thank you so much for joining. And happy 2021!

Feroldi: Emily, happy 2021, and I really wish you a happy New Year!

Flippen: A happy New Year! And listeners, happy New Year to you as well!

That does it for this episode of Industry Focus. If you have any questions, you can always reach out to us by email at [email protected] or tweet at us @MFIndustryFocus.

As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against any stocks mentioned, so don't sell or buy anything based solely on what you hear.

Thanks to Tim Sparks for his work behind the screen today. For Brian Feroldi, I'm Emily Flippen, thanks for listening and Fool on!