All businesses have been affected by the COVID-19 pandemic. That much is certain. But the ways in which the pandemic has impacted different companies has more to do with the vulnerabilities of their industry than anything else. 

After over a year's worth of lockdowns, many of these companies have paid their dues. And the best ones are ready to stage an epic comeback. With that, we asked some of our contributors which pandemic underperformers are set to boom as the economy reopens. They came up with specialty chemical company Ecolab (ECL 0.53%), aerospace and defense giant Raytheon Technologies (RTX), and one of the largest U.S.-based airlines, Delta Air Lines (DAL 3.05%)

A rocket blasts off out of the stratosphere into space.

Image source: Getty Images.

Let's keep it clean

Scott Levine (Ecolab): Of the many stocks that have suffered over the past year, one I have a close eye on is Ecolab. Last March, shares tumbled 14% as the world began to wrestle with the lockdowns and other challenges brought by the novel coronavirus. At the time, the stock's drop didn't seem that precipitous considering the S&P 500 dipped 13% over the same period. A year later, however, the story is much different. Ecolab's stock has risen 7.5% while the S&P 500 has bounded 27% higher.

Providing various solutions -- water, hygiene, and infection prevention -- to a diverse range of markets, Ecolab is acutely familiar with the deleterious effects of COVID-19 on the economy. For example, in its recent fourth-quarter 2020 earnings presentation, the company reported a 6% decline in revenue from 2019 to 2020. But it's the bottom line that bore the brunt of the burden. Ecolab reported 2020 EPS of negative $4.20, representing the first time in nearly 30 years that the company has reported a loss on the bottom line.

ECL EPS Diluted (Annual) Chart

ECL EPS Diluted (Annual) data by YCharts.

With the economy reopening, restaurants will likely see increases to their limited capacity restrictions, and diners who had relied on cooking at home to mitigate their exposure to COVID-19 will flock to restaurants, where they can escape from their home kitchens and indulge in being waited on. On the company's Q4 2020 conference call, Christophe Beck, Ecolab's president and CEO, stated that the company's institutional business, which includes restaurants, "is well positioned to benefit from the market's reopening and from the rise of global hygiene standards" -- important to note considering the company's institutional business segment accounted for 30% of sales in 2020.

Moreover, Beck believes that the company is poised to rebound in 2021 and return to positive earnings. According to Beck, the company's "new business wins, product and service innovation, investments in new hygiene and digital technologies, and successful sales and profit initiatives will deliver full year 2021 earnings above 2019 results from continuing operations."

And while waiting for the company's turnaround to materialize, investors can get paid for their patience. A noted Dividend Aristocrat, Ecolab has rewarded shareholders with a dividend on its common stock for 84 years running. Currently, the dividend represents a 0.92% forward yield. It may not be the highest-yielding dividend stock in investors' portfolios, but free money is free money and certainly nothing to sneeze at.

The economy is recovering and so will air travel

Lee Samaha (Raytheon Technologies): It's no secret that commercial air traffic has been hit hard by the pandemic, and will take at least a few years to fully recover.

But here's the thing. Instead of thinking about the sector as one to avoid due to the uncertainty, why not take the glass-half-full approach and see it as one about to embark on a multi-year recovery? After all, stock prices don't have memory embedded in them, and investors usually look forward not backward.

In this context, buying Raytheon for its commercial aerospace exposure, largely through its Pratt & Whitney aircraft engines and Collins Aerospace (systems, avionics, interior systems) division, makes sense. However, it's not just about commercial aviation because the bulk of Raytheon's business comes from defense right now. As such, the defense business will support the company as commercial air travel makes a comeback. It will also help reduce risk should any other external event hit commercial air travel. 

CEO Greg Hayes forecasts $4.5 billion in free cash flow (FCF) for 2021, or $5 billion if you strip out one-time investments made in connection with the merger in 2020. Using the $5 billion figure would mean Raytheon trades on less than 23 times its full-year 2021 FCF. That's too cheap for a company that should see a significant expansion in earnings and FCF over the next few years as commercial air traffic returns.

"The toughest year in Delta's history"

Daniel Foelber (Delta Air Lines): It's no secret that the pandemic has taken its toll on the airline industry. Delta CEO Ed Bastian summed it up well, calling 2020 "the toughest year in Delta's history." Even the best airlines like Delta and Southwest Airlines underperformed the market in 2020. And for good reason. In just one year, Delta lost more money than it made in the three-year stretch between 2017 and 2019. 

The short-term performance is jarring, but there are long-term implications, too. Delta's balance sheet is in its worst shape in five years as the company's net long-term debt position, debt-to-equity ratio, and debt-to-capital ratio are all at dangerously high levels.

DAL Net Total Long Term Debt (Quarterly) Chart

DAL Net Total Long Term Debt (Quarterly) data by YCharts

However, Delta is one of the better-positioned airlines to take advantage of a reopening economy. The company is bringing back pilots over the summer. Management is confident that it can return to profitability in the second half of the year, launching it toward what it calls a "sustained recovery." Before the pandemic, Delta was arguably the best-performing airline, sporting the highest net income and FCF growth rate of the major U.S. airlines.

Delta's fourth quarter showed signs of progress. The company's revenue was down 30% compared to the same period in 2019 -- which sounds like a lot until you consider its third-quarter revenue was down 79% year over year. The good news for Delta is that air traffic is improving nicely so far in 2021, which could give it a strong start to the year. According to data by the TSA, traveler throughput is enjoying a meaningful rebound from its pandemic lows. In April 2020, TSA checked 95% fewer people through its gates than in April of 2019. In the fourth quarter of 2020, it reported 63.3% fewer travelers. By January, throughput was down just 60.3% from 2019 levels. And in February, the TSA checked just 57.1% fewer passengers than the same period in 2019.

The numbers are still bad, but the more passengers return to the skies the quicker Delta can stage its recovery. And with the vaccine distribution well under way, Delta could enjoy a surge in vacation travelers over the summer.