10 Stocks That Disappointed in 2020

Unfortunately, more than a few companies have been forced to face the music this year, grappling with strained balance sheets and/or declining revenues that the pandemic has only magnified. Many such stocks were facing stark headwinds before the 2020 market crash.

Here’s why you may want to think twice before including the following 10 companies on your short list of stocks to buy.

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If you’re not familiar with beauty company Coty (NYSE: COTY), chances are you’ve heard of one or more of the over seven dozen brands in its portfolio, including Clairol and Rimmel. The stock has declined significantly since the beginning of the year, having lost nearly 30% of its value from January to the time of this writing.

Coty’s net revenue dropped 22% in the full-year fiscal 2020, and 13% during the first quarter of fiscal 2021. The company’s operating income during Q1 fiscal 2021 totaled just $79 million compared with $126 million the year prior. There’s also Coty’s tremendous liabilities to consider -- $7.9 billion in financial net debt and just $535.7 million in cash and cash equivalents.

ALSO READ: 3 Stocks to Avoid This Week

Although shares of Blue Apron (NYSE: APRN) are trading slightly higher than in January, the meal kit service just isn’t turning enough of a profit to hold its appeal with investors. In 2019, the company reported a 32% decrease in revenue compared with 2018 due to a waning customer base.

Things weren’t much better in the first quarter of 2020, either, during which time the company’s net revenue dropped 28% year over year. As widespread stay-at-home orders went into effect and prompted consumers to turn to alternative methods of obtaining food, Blue Apron saw an uptick in demand. As a result, the company reported a 10% year-over-year increase in revenue in the second quarter and a 13% revenue surge in the third compared with the same stretches in 2019.

Even with these improvements to Blue Apron’s balance sheet, there are still some red flags that are tough to ignore. For instance, during the third quarter, Blue Apron reported a 7% decline in customers despite its double-digit revenue growth, and its net revenue was actually down 14% quarter over quarter. The company’s cash position at the end of the third quarter ($58.7 million) also paled in comparison to its total liabilities of $161.2 million.

As travel this year came to a screeching halt around the world, shares of car rental company Hertz Global Holdings (OTC:HTZG.Q) sunk to an all-time low and its profits plunged. The company filed for Chapter 11 bankruptcy protection in May. To add insult to injury, the company was then delisted from the New York Stock Exchange (NYSE) at the end of October. Hertz’s U.S. rental car revenue also plunged 56% in the third quarter ended Sept. 30. Although management is hoping to pave the way to a future return to profitability with the reorganization of its liabilities, right now there’s nothing about this stock that begs to be bought.

Aurora Cannabis (NYSE: ACB) currently trades right around $10. This price is down significantly from what shares were selling for in January ($25).

During the first quarter of fiscal 2021, which ended Sept. 30, Aurora reported $67.8 million Canadian dollars ($52.94 million) in total net revenue. This figure represented a modest 1% decline from its revenue the quarter before, which in and of itself isn’t unusual considering broader market conditions. Aurora’s international medical business also surged 40% during Q1 fiscal 2021.

On the flip side, consumer net cannabis revenue dropped 3% during that three-month period. The most alarming number on Aurora’s first-quarter balance sheet was its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which suffered a nearly $58 million loss.

With Aurora having only $250 million in cash at its disposal and hemorrhaging EBITDA losses, it may be wise to hold off on buying its shares right now.

ALSO READ: 2 Cannabis Stocks That Could Be Millionaire Makers

Boeing (NYSE: BA) may have its 737 MAX flying the friendly skies once more, but the company’s extreme debt load and waning revenue continue to weigh heavily on its balance sheet. In the third quarter, Boeing reported a 29% year-over-year plunge in its revenue, which was down 27% during the first nine months of 2020 compared with the same period last year. The company has a staggering $61 billion in consolidated debt to pay down. In contrast, Boeing had just $10.6 billion in cash on its balance sheet at the conclusion of the third quarter.

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.

Bank stocks have had their fair share of hurdles to overcome since the pandemic began in light of the struggling economy. Shares of Bank of America (NYSE: BAC) have fallen 18% from the beginning of the year. The company’s revenue was down 1% in the first quarter, then plunged 3% in the second quarter.

Things really went south in the third quarter. During the three-month period, Bank of America’s revenue plunged by double digits (11%). Also during the quarter, the company’s consumer banking and global banking net income dropped by $1.3 billion and $1.2 billion, respectively.

Like it or not, brick-and-mortar fixtures like GameStop (NYSE: GME) are fast becoming the remnants of an era gone by. Because retailers such as GameStop don’t have essential store status, ongoing closures earlier in the year pummeled its balance sheet. The company was in trouble before the pandemic, though, reporting a 19% decline in global comparable-store sales last year.

GameStop’s e-commerce sales grew 800% year over year during the second quarter of this year, which signals hope that the company could build on its digital presence to breathe life back into its business model. Second-quarter net sales were still down nearly 27% compared with the same period in 2019. The company releases its third-quarter earnings on Dec. 8.

ALSO READ: 3 Top U.S. Stocks to Buy in December

Another hard-hit financial services stock, Wells Fargo (NYSE: WFC) has declined by 45% from the beginning of 2020. The company also slashed its dividend payout by a tear-inducing 80% earlier this year. In its most recent earnings release for the third quarter ending on Sept. 30, Wells Fargo reported its revenue down $3.1 billion year over year.

Stocks like Macy’s (NYSE: M) were already facing headwinds before the pandemic, as the retail environment faces transitions from traditional brick-and-mortar stores to meet the demands of the digital sales boom. Macy’s promptly suspended its dividend payout in March, when pandemic lockdowns struck. Although Macy’s reported 27% year-over-year digital sales growth in the third quarter, overall net sales were down 23%. The company currently has $4.9 billion in long-term debt to pay down, with a much smaller cash position of $1.6 billion.

Trading for just around $1 per share, cannabis company HEXO (NYSE: HEXO) is just about as close to rock bottom as a stock can get. Shareholders will vote on Dec. 11 whether or not to approve an 8-to-1 reverse stock split, which could help it to subvert a potential delisting. During fiscal 2020, which ended on July 31, HEXO reported that its revenue from sales of goods was up 86% year over year. That figure may seem promising at first glance, but HEXO’s losses from operations during fiscal 2020 totaled a staggering $476.6 million, while its net losses were even higher at $546.5 million.

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.

If you’re looking to spruce up your portfolio as we head into 2021, perhaps you’ve considered one or more of the 10 companies on this list as potential investments to buy on the dip. While some of these stocks may achieve a level of recovery in the new year, their viability as long-term investments remains uncertain. If you’re looking for stocks to buy on a discount, these three growth stocks are far better contenders that could add value to your portfolio over the next five to 10 years.

Rachel Warren has no position in any of the stocks mentioned. The Motley Fool recommends GameStop and HEXO. The Motley Fool has a disclosure policy.