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Is It Time to Buy the Nasdaq's 3 Worst-Performing January Stocks?

By Robin Hartill, CFP® - Feb 5, 2021 at 7:45AM

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Copart, Booking Holdings Inc., and Marriott International had an abysmal January. Should you buy them anyway?

The Nasdaq 100 Index finished January 2021 on a flat note, with modest returns of 0.31%. Within that index, Nasdaq companies digital car auctioneer Copart (CPRT -3.03%), online travel agency Booking Holdings Inc. (BKNG -3.05%), and Marriott International, Inc. (MAR -1.07%) had a rotten start to 2021, with the stock prices for each each sinking by more than 11%.

Does last month's plunge in value represent a buying opportunity -- or is this a sign to avoid these stocks at all costs? Let's find out a bit more about Nasdaq's three worst-performing January stocks and whether we can answer that question.

Old rusty cars in a scrapyard.

Image source: Getty Images.

1. Copart

January 2021 got off to a dismal start for online car auctioneer Copart. The little-covered stock saw share prices plunge by 13.75% in January, making it the Nasdaq 100's worst performer of the month.

But Copart's drop wasn't the result of bad news -- or any news at all, really. It seems more like a correction after shares shot up 10.41% in December. By comparison, the S&P 500 index rose 2.68%, while the Nasdaq 100 index was up 3.53% in the same period. 

COVID-19 has been a mixed bag for Copart. It had the advantage of being a digital business before the pandemic, so unlike some competitors, it didn't have to suddenly make a drastic shift to its operations. But Copart makes money when it salvages wrecked cars and auctions them online. Fewer miles driven would logically lead to fewer wrecked cars, though Copart President Jeffrey Liaw noted in a November earnings call that accident frequency per miles driven has actually spiked during the pandemic. Another factor was the 2020 Atlantic storm season, which caused fewer damages than usual even though it produced a record 30 named storms.

International sales were down 11% during the first quarter, which ended Oct. 30, while U.S. sales dropped by 13%. But its average selling price rose 37%, fueled by surging demand for used cars during the pandemic.

The mean analyst price target for Copart is $126.50, which is 11% more than its share price of $113.96 at Tuesday's close. If you're interested in Copart stock, January's performance shouldn't deter you. 

A woman relaxes in a chair on the beach during a vacation.

Image source: Getty Images.

2. Booking Holdings Inc.

Booking Holdings Inc. fell 12.72% last month, making it the second-worst performer on the Nasdaq 100 in January. But the online travel agency is the rare travel stock that rose slightly in 2020, finishing the year about 8% higher. Investors should think carefully before buying Booking Holdings stock, though -- but not because of all the oft-cited uncertainties surrounding how the pandemic will forever change travel.

Even before the pandemic, its revenue growth was starting to slow down. Booking Holdings' competitive advantage is shrinking compared to Airbnb's (ABNB -3.91%), as leisure travelers seek out an authentic local experience instead of staying at a large hotel. Business travelers are more likely to use Booking platforms to book hotel stays, but it's easier than ever to do so directly through Alphabet's Google. Plus, the growth of loyalty programs encourages frequent travelers to book directly through airlines and hotels, rather than using a third-party site. As Booking Holdings' economic moat grows slimmer, its stock is losing luster.

J.W. Marriott Orlando Bonnet Creek Resort & Spa

J.W. Marriott Orlando Bonnet Creek Resort & Spa. Image source: Marriott International.

3. Marriott International Inc.

The Nasdaq 100's third-biggest loser for January was Marriott International Inc., the largest hotel operator in the globe, whose stock price plunged 11.83%. Not surprisingly, Marriott's stock has often gone up and down based on whether the COVID-19 news of the day is good or bad. Despite all the unknowns about how quickly travel can recover, along with increased competition from Airbnb, there are plenty of reasons to be optimistic about Marriott in the long run.

Even though revenue per available room, or RevPAR, tanked by 66% during the third quarter compared to 2019, Marriott still managed to return to profitability, mainly by slashing operating expenses, but also through a modest uptick in demand. It logged adjusted earnings per share of $0.06, while analysts had predicted adjusted losses of $0.08.

Marriott's shares are currently down nearly 14% compared to a year ago. With 30 brands in its portfolio and one of the strongest loyalty programs in the business, Marriott's recovery seems inevitable at some point. In the long term, buying Marriott stock right now may turn out to be a bargain. But unless you have plenty of time and patience to ride out the long road ahead, hold off on adding Marriott to your portfolio.

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Stocks Mentioned

Copart, Inc. Stock Quote
Copart, Inc.
CPRT
$108.85 (-3.03%) $-3.40
Marriott International, Inc. Stock Quote
Marriott International, Inc.
MAR
$138.69 (-1.07%) $-1.50
Booking Holdings Stock Quote
Booking Holdings
BKNG
$1,838.42 (-3.05%) $-57.82
Airbnb, Inc. Stock Quote
Airbnb, Inc.
ABNB
$97.53 (-3.91%) $-3.97

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