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Are These 5 Beaten-Down Nasdaq Stocks Ready to Surge in 2021?

By Matthew Frankel, CFP® - Feb 2, 2021 at 6:07AM

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Not all stocks in the tech-heavy Nasdaq have done well.

Over the past year, the Nasdaq Composite index has surged by 45%. Most of the gains can be attributed to stocks that have done well in the stay-at-home and remote work environments of the COVID-19 pandemic.

There are many Nasdaq stocks that haven't come close to the performance of the overall index, mainly because of pandemic-related business disruption. However, some could be ready to rally once the pandemic comes to an end. Here are five in particular to put on your radar.

Woman looking at financial charts and stock trading app.

Image source: Getty Images.

5 Nasdaq stocks that have underperformed

There are literally hundreds of Nasdaq stocks that have underperformed. After all, by definition, roughly half of all stocks underperform and half outperform. But here are five that have done particularly poorly over the past year, and for good reasons, along with how the S&P 500 and Nasdaq Composite benchmark indices have performed.

Company (Symbol)

Industry

1-Year Total Return

Lamar Advertising (LAMR 0.85%)

Real estate: outdoor advertising

(8.7%)

Marriott International (MAR -0.35%)

Hospitality

(15.4%)

Wynn Resorts (WYNN -1.61%)

Gaming

(19.1%)

Caretrust REIT (CTRE 0.96%)

Real estate: Healthcare

(8%)

Dave & Busters Entertainment (PLAY -0.73%)

Entertainment

(24.3%)

Vanguard S&P 500 ETF (NYSEMKT: VOO)

N/A

18.1%

Fidelity Nasdaq Composite ETF (ONEQ 0.38%)

N/A

46.6%

Data source: Ycharts. Returns as of 2/1/2021.

Why have these stocks performed so poorly?

As mentioned before the chart, all of these have underperformed the stock market for good reasons. And not surprisingly, it's mostly due to the pandemic. To briefly run down the reasons:

  • Lamar Advertising invests in billboards and other outdoor advertising structures, particularly display ads in transit systems. With fewer people commuting to work and traveling over the past year or so, many companies have pumped the brakes on outdoor advertising spend.
  • Marriott International manages and franchises hotels all over the world, and it's not hard to figure out why this hasn't been a great business during the pandemic. In many cases, hotels are running at a small fraction of their pre-pandemic occupancy.
  • Wynn Resorts owns gaming resorts in Las Vegas and Macau, among other markets. Casinos were forced to shut down in the early days of the pandemic, and while most have reopened, leisure travel is nowhere near normal levels.
  • Caretrust REIT is a real estate investment trust that owns and operates skilled nursing facilities, whose residents were dramatically impacted by the pandemic. Senior move-ins have not recovered, and likely won't get back to pre-pandemic levels for some time.
  • Dave & Busters runs family entertainment centers. Many have reopened, but there are quite a few that are still closed, including nearly all its locations in New York and California.

Will they outperform in 2021 and beyond?

The point is that these five companies were hard-hit by the COVID-19 pandemic but could also stand to benefit tremendously as things (hopefully) start to return to normal in 2021. Despite the remote work trend of 2020, studies have indicated that most people want to work in offices, at least on a part-time basis, which would be good news for the outdoor advertising industry.

Leisure travel has also picked up quite a bit since the early days of the pandemic. As the vaccine rollout ramps up, this should only continue to increase. Many families are laying low during the winter season, but there's tons of pent-up demand for family entertainment centers like those offered by Dave & Busters. Last but certainly not least, while the senior housing industry will certainly take some time to normalize, the older age groups of the population are still growing rapidly, so this should be a long-tailed growth industry for decades to come.

The bottom line is that some of the companies most affected by the pandemic could be long-term bargains for patient investors. I can't say with 100% certainty that all of these will surge in 2021, although I think it's likely they'll all get a lift once the pandemic numbers start to come down. But all are well-run businesses that should have bright futures, so they could be smart stocks to consider for your portfolio while they're still underperforming.

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Stocks Mentioned

Marriott International, Inc. Stock Quote
Marriott International, Inc.
MAR
$138.20 (-0.35%) $0.49
Wynn Resorts, Limited Stock Quote
Wynn Resorts, Limited
WYNN
$56.86 (-1.61%) $0.93
Lamar Advertising Company Stock Quote
Lamar Advertising Company
LAMR
$89.11 (0.85%) $0.75
Fidelity Commonwealth Trust - Fidelity Nasdaq Composite Index Tracking Stock Stock Quote
Fidelity Commonwealth Trust - Fidelity Nasdaq Composite Index Tracking Stock
ONEQ
$44.50 (0.38%) $0.17
CareTrust REIT, Inc. Stock Quote
CareTrust REIT, Inc.
CTRE
$18.91 (0.96%) $0.18
Dave & Buster's Entertainment, Inc. Stock Quote
Dave & Buster's Entertainment, Inc.
PLAY
$33.87 (-0.73%) $0.25

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

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