10 Deadbeat Stocks in 2020

It’s an understatement to say that 2020 was full of surprises for investors. During a year with a global pandemic, lockdowns, and an unprecedented market crash, the S&P 500 finishd 2020 with a gain of around 16%.

Even as the broad economy has been hit hard, some sectors like tech stocks and electric vehicle stocks have thrived during the pandemic. And the bull market has brought in a wave of new investors to capitalize on the recovery, driving valuations to what some feel are bubble levels.

However, even in this eye-popping rally, plenty of stocks have been left behind. Keep reading to see 10 deadbeat stocks that are limping into 2021.

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It’s no secret that the movie theater business has been hammered by the coronavirus pandemic. Theaters were closed for several months early in the crisis and have been able to operate only at limited capacity since then. AMC Entertainment (NYSE: AMC), the world’s largest movie theater operator, was struggling before the pandemic hit with a bloated debt burden and marginal profitability on a generally accepted accounting principles (GAAP) basis.

Now, the pandemic is on the verge of pushing the company into bankruptcy. In October, the company warned it could run out of cash by early next year. It has since raised money through new share offerings, but those will only dilute current holders so much that their holdings will likely never regain their prior value.

With the stock down about 70% in 2020 and the pandemic still raging, AMC faces a difficult road back.

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Energy stocks have also been hit hard this year. Oil prices have plunged as transportation, and therefore oil consumption, has been sharply curtailed this year, and crude prices even sank into negative territory in April, evidence of both weak demand and a glut in supply.

Those dynamics have been bad news for Transocean (NYSE: RIG), which as an offshore drilling specialist, is more exposed to the price of oil than lower-cost producers.

That led the company to take a $597 million impairment charge earlier this year.

Transocean has been a market laggard for a long time. The stock is down 82% in the last five years, and 2020 has been similarly painful with the stock down nearly 70%.

Canadian marijuana grower Aurora Cannabis (NYSE: ACB) was another deadbeat stock last year. Even as other marijuana stocks mostly held their own in 2020, a cash crunch and multiple waves of shareholder dilution sank Aurora stock.

Several times the company has failed to achieve its goal of generating a profit, even on an adjusted EBITDA basis. And it has been forced to close facilities, giving up its edge in capacity.

In its most recent quarter, the company posted an operating loss of 42 million Canadian dollars. Investors are likely to continue to lose faith in the stock until it turns a profit or the regulatory landscape changes in the cannabis industry. The stock lost nearly 70% in 2020 and has collapsed since a surge in 2018.

Like entertainment stocks, the travel sector was crushed by the coronavirus pandemic, and no part of the travel industry was more affected than cruise lines, which can be petri dishes for viruses even in normal times.

Cruises were basically shut down in March as the virus spread around the world, and cruise lines like Carnival (NYSE: CCL) (NYSE: CUK) have struggled to limit their cash burn as they’ve been forced to wait out the pandemic until they can return to regular operations.

Carnival has relied on debt raises and secondary offerings to bring in cash during a time with almost no business.

Through the first three quarters of the year, the company has had a GAAP loss of $8 billion, compared with a profit of $2.6 billion last year. Its debt burden has also doubled to $25 billion, and shares outstanding rose by 10%.

Not surprisingly, the stock lost about 60% in 2020, and it could face a tough 2021. Cruises are likely to be among the last businesses to recover from the pandemic as it will need to be safe for customers to come back.

ALSO READ: Here's the Worst Stock I Bought in 2020, and Why I'm Not Selling

Private prison operator CoreCivic (NYSE: CXW) has been one of the more unexpected deadbeat stocks this year. CoreCivic has seen costs rise as it’s dealt with pandemic-related challenges, and profits have been cut in half in the company’s first three quarters of 2020.

Additionally, the arrival of Joe Biden in the White House means the next administration will likely be less friendly to prison contractors than the Trump administration was. In its final year, the Obama administration had said it would phase out private prison use, but that order was rescinded shortly after Trump came into office. With Biden’s inauguration, the issue could be revisited, making 2021 another difficult year for CoreCivic after the stock fell about 60% in 2020.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Chinese online dating company Momo (NYSE: MOMO) got hit in multiple ways in 2020. Not only did the stock dive on coronavirus fears at the beginning of the year, but it also fell later in the spring when the Chinese government cracked down on Momo’s Tantan app, ordering it removed from certain app stores.

In response, Momo said it would strengthen the app’s content screening efforts and suspend users from making posts for a month.

That move cut Momo’s profits nearly in half in the second quarter, and through the first three quarters, revenue is down nearly 10% and profits are down by a quarter. Considering Momo had been viewed as a growth stock, shares have plunged on the weak results, down about 60% in 2020.

Occidental Petroleum (NYSE: OXY) may be a reminder to investors to be careful what you wish for. Occidental won a bidding war last year against Chevron to acquire Anadarko Petroleum for $55 billion, including debt. The oil producer levered up significantly to seal the deal, selling $13 billion in bonds to fund the $38 billion cash purchase.

As a result, Occidental found itself deeply in debt just as the oil market collapsed when the pandemic struck.

Revenue fell about 40% in the third quarter as prices have fallen, and the company has reported a $13.9 billion pre-tax loss through the first three quarters of the year, compared with a profit in the same period a year ago.

Given that performance, along with $38 billion in debt, it’s not surprising the stock fell nearly 60% in 2020.

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Retail stocks have been battered by the pandemic, but most have made substantial recoveries since Pfizer and BioNTech announced successful Phase 3 trials of their coronavirus vaccine.

However, DSW parent Designer Brands (NYSE: DBI) still limped into the end of the year, perhaps because its e-commerce business is not as strong as some of its peers' and it’s dependent on mall-based traffic. In the third quarter, revenue fell 30%, following an even sharper dive in the second quarter.

Through the first three quarters of the year, revenue is down about 40%, and the company has lost $355 million, compared with $102 million in profit in the same period a year ago.

Against that backdrop and amid fears of a slow recovery in 2021, the stock lost about 50% in 2020.

Airlines have had a rough year, and United Airlines (NYSE: UAL) is no different. A significant portion of the company’s business comes from business travel and international leisure trips, which were essentially eliminated by the pandemic. The company has turned to stopgap solutions like carrying cargo to stem its losses, but the results are still ugly.

United raised $22 billion from March through its third quarter in order to survive the crisis, and it reduced its total operating costs by 59% in the third quarter to help control its cash burn.

Despite those efforts, the company still posted an adjusted loss of $2.4 billion in the third quarter as passenger revenue declined 84% and overall revenue fell 78%. Through the first three quarters of the year, the airline has lost more than $5 billion.

It’s not surprising then that the stock finished 2020 down 50%.

Of all the big four banks, Wells Fargo (NYSE: WFC) was by far the poorest performer in 2020. Compared with peers like JPMorgan Chase or Bank of America, Wells Fargo is much more dependent on the commercial banking sector as those companies have large investment banking divisions.

Wells Fargo is also the largest mortgage lender of the big banks, giving it exposure to a potential spike in foreclosures when current forbearance allowances expire. Additionally, low interest rates impacted the company’s ability to profit on loans, and it’s taken billions in losses for bad loans this year. Its allowance for loan losses doubled from the end of last year to $20.8 billion as of the third quarter, and it was forced to slash its dividend by 80%.

For the first three quarters of the year, it reported a loss of $932 million. Not surprisingly, the stock lost 45% in 2020.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

No one expected a global pandemic to turn the world upside down in 2020, and 2021 is set to be an unpredictable year as well. A new administration will take over the White House and be responsible for the vaccine rollout. Vaccine distribution and the expected end to the pandemic is likely to be the most important factor in determining an economic reopening, which many of the stocks on this list depend on.

Still, with coronavirus cases and deaths at record highs, the beginning of 2021 won’t be much different than 2020 has been. However, stocks poised to benefit from pent-up demand when the pandemic ends like those in the travel sector should be among the fastest to recover once the crisis fades.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Designer Brands Inc. and Momo. The Motley Fool has a disclosure policy.