Please ensure Javascript is enabled for purposes of website accessibility

Wall Street Has Given Up on These 3 Stocks, and That's a Huge Mistake

By Rick Munarriz - Jan 26, 2021 at 9:05AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Not every stock has rallied over the past year. These three household names have fallen out of favor with investors, but they should bounce back.

Stocks are hot these days, but there are always exceptions to the rule. There are more more than 1,400 stocks with market caps greater than $300 million that have fallen over the past year. A little more than two-thirds of those investments have fallen by at least 10% since last year. Most of the markdowns are earned, but Wall Street doesn't always get it right. 

AT&T (T -0.28%), Sirius XM Holdings (SIRI 1.03%), and JetBlue (JBLU 2.03%) are three of the stocks with double-digit percentage declines over the past year. They're in the market's dog house, but that's a big mistake.

A woman with her dog holding up 2021 candles and a face covering.

Image source: Getty Images.

AT&T

There isn't a lot of respect for AT&T these days. The stock has dropped to the point where its yield has ballooned up to 7.2%. It's a sustainable payout, too.

AT&T is more than just a telco of course. The namesake wireless business is a major player in a field that's about to take a step up in the 5G revolution. AT&T has also become a content powerhouse with the acquisition of Time Warner three summers ago. In a world where content is king AT&T now owns DC Comics, HBO, CNN, and several other audience magnets. A Hollywood Reporter article on Monday that there is currently a Harry Potter series in the early stages of development for AT&T's HBO Max.  

AT&T is misunderstood right now. There are a lot of segments here that are languishing including DirecTV and AT&T's wireline business. However, wireless and WarnerMedia now account for beefy 60% of the revenue mix. AT&T reports financial results on Wednesday, giving it the perfect stage to woo back investors.  

Barbara Streisand and the cast of Broadway's "School of Rock" at a Sirius XM Town Hall event.

Image source: Sirius XM Holdings.

   

Sirius XM Holdings

Satellite radio isn't a hot commodity these days. The pandemic gnawed away at morning commutes, school drop-offs, and cross-country road trips. If we're not driving as much as we used to it's fair to say that we're not going to want to pay a premium for audio entertainment. 

Last year was rough for Sirius XM. Shares of the satellite radio monopoly declined in 2020, the first time we've seen that happen on a dividend-adjusted basis since 2008.

Sirius XM understandably struggled through the first few months of the pandemic, but it's rolling again. It wound up with 30.9 million self-pay subscribers by the end of last year, padding its tally by 909,000 premium accounts for all of 2020. Sirius XM exceeded its guidance. 

It also initiated its guidance for 2021 earlier this month, and the crystal ball is encouraging. Sirius XM expects to grow its audience by 800,000 self-pay net subscribers this year. It's eyeing roughly $1.6 billion in free cash flow and $8.35 billion in revenue. Armed with some smart acquisitions to give it some optionality beyond satellite radio Sirius XM stock should get back on a winning streak this year. 

A JetBlue flight attendant checks stations with passengers on a JetBlue plane.

Image source: JetBlue.

JetBlue

One of last year's worst-performing sectors was travel, and airline stocks in particular were a bumpy flight for shareholders. JetBlue stock tumbled 22% in an otherwise buoyant market last year, but it's hard to find a better stock to bank on if you want to grab a window seat on an airline investment.

JetBlue is struggling like the rest of its peers, but it has a strong consumer brand with a cult following. Consumer travel should recover faster than corporate travel, and that plays into JetBlue's strengths as it doesn't offer first or business class seating (outside of its luxury Mint seating on select flights). 

Analysts see JetBlue's top line bouncing back sharply this year, busting back into profitability next year. I realize that three years is a long time in sizing up valuation metrics, but JetBlue is trading for less than four times Wall Street's 2024 profit target. With JetBlue already starting to take advantage of the weakness at larger legacy airlines by entering new markets -- flights out of Miami to three major cities start in two weeks -- the stock should be a leader out of the industry slowdown. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AT&T Inc. Stock Quote
AT&T Inc.
T
$21.26 (-0.28%) $0.06
Sirius XM Holdings Inc. Stock Quote
Sirius XM Holdings Inc.
SIRI
$6.39 (1.03%) $0.07
JetBlue Airways Corporation Stock Quote
JetBlue Airways Corporation
JBLU
$10.82 (2.03%) $0.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
344%
 
S&P 500 Returns
120%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.