Last year was a lucrative one for most investments, but some market favorites were sputtering near the 2020 finish line. These recent laggards need to get back on track, and we may as well go over the best chance for that to happen in 2021.
Adobe Systems (ADBE 0.87%), Zoom Video Communications (ZM 1.57%), and Sirius XM Holdings (SIRI) have a lot to prove after recently falling out of favor. Let's dive into what went wrong -- and what can go right in the year ahead.
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Adobe
Adobe posted uninspiring financial results last month. Revenue for the quarter that ended in late November clocked in 14% higher. Top-line growth for the entire fiscal year came in at 15%.
Growth in the low teens may not seem too shabby, but Adobe's revenue growth had topped 20% in each of the four previous fiscal years. Adobe should've been pandemic-proof. Digital publishing and its electronic signature business should've been booming during the shelter-in-place phase of the COVID-19 crisis.
Adobe was a winner for the calendar year. The stock rose 52% in 2020. However, it gained just 2% in the final three months of the year when the general market was rallying. Adobe needs to get back on track, and thankfully it has the liquidity to make its own luck. Adobe spent $3 billion repurchasing 8 million shares in fiscal 2020, and its board just authorized another $15 billion of stock repurchases through the end of fiscal 2024 once the current plan is authorized. Adobe will have the flexibility to buy into any weakness at this point, and along the way it will improve its profitability on a per-share basis.
Zoom
You probably didn't expect to see Zoom on a list of laggards, but bear with me. There was a point in 2020 -- mid-October if you're calendar-checking -- when the next-gen videoconferencing platform was an eight-bagger. Here we are just three months later and the stock has fallen roughly 40% from its all-time highs. Like Adobe, Zoom is a tech stock that has faded while its peers are striking fresh highs.
Investors began to bail on Zoom in November and December when a pair of viable vaccines emerged and were ultimately granted Emergency Use Authorization. The thinking here is that folks won't be on Zoom as much once the pandemic is over. Call me crazy, but I think there will be some form of virtual schooling in the future, and there's no way that families and corporations will stop meeting online every now and then for the sake of convenience and to save some money.
Zoom is rocking. Revenue soared 367% in its most recent quarter. Returning customers are spending an average of at least 30% more than they were a year earlier, and that's been the case for 10 consecutive quarters. In short, the pandemic shaved a few years off of Zoom's growth trajectory, but it was and will continue to be a rock star in the next new normal.
Sirius
We finally get to a stock that retreated in 2020, and didn't just stumble as it got to the finish line. Sirius XM shares slipped 9% last year, and that's a pretty big deal. The stock had delivered positive returns for 11 straight years before proving to be mortal last year.
It's easy to see why the satellite radio provider fell out of favor earlier in the year. Satellite radio is a product we consume largely in our cars, and our vehicles weren't going on work commutes, school trips, or fun errands like before. However, Sirius XM did recover as the year played out. It returned to revenue and subscriber growth. It also managed to extend its deal with Howard Stern another five years. He could've left at the end of last month.
Adobe, Zoom, and Sirius XM are all better than what their stock charts show these past couple of months. They'll be back. They have the right catalysts to make it happen.
