These Are the 10 Worst-Performing Stocks in 2020

Author: Jeremy Bowman | September 21, 2020

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Counting down from bad to worst

2020 has been a disaster for most industries. With the coronavirus pandemic, the economic crisis, social unrest, and natural disasters including wildfires and hurricanes, it’s been a tough year for companies doing business in the real world.

Consumer discretionary businesses like travel, restaurants, and retailers have been hit hard by the pandemic, as normal demand patterns have been upended by the crisis, and sectors like commercial real estate, manufacturing, and financials have suffered as well. However, according to data from Finviz, no sector has collapsed as much as the energy industry, as oil and gas stocks account for nearly all of the biggest losers so far this year.

Keep reading to see our countdown of the 10 stocks -- each still with a market cap of at least $300 million -- that have fallen the furthest this year.

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Fracking

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10. NexTier Oilfield Solutions (down 70.9%)

Declining oil prices have crushed much of the oil industry from upstream drillers on down, but companies that focus on high-cost shale oil have been among the hardest hit.

NexTier Oilfield Solutions (NYSE: NEX) has been a consistent loser since its 2017 IPO, and the stock has fallen sharply amid the crash in oil prices this year. Based in Houston, the company specializes in drilling-well completion and production service for fracking. Its stock plunged during the market crash, falling all the way to $1, though it has rebounded since then to nearly $2 a share.

About 89% of the company’s revenue last year came from well completions, constructions, and related services. And with shale activity essentially drying up, spending in those areas has disappeared. In its second quarter, revenue fell from $627.6 million in the first quarter to $196.2 million and the company reported a net loss of $112.5 million.

ALSO READ: 2 Stocks I'd Avoid at All Costs

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9. Occidental Petroleum (down 71.5%)

Perhaps one of the best-known blowups in the oil industry, Occidental Petroleum (NYSE: OXY) shares had started falling in 2018. And the company's merger last year with Anadarko left it bloated with debt at the wrong time, just before the coronavirus pandemic led to the crash in oil prices.

In the second quarter, the company reported a whopping net loss of $8.4 billion, which included $5.2 billion in asset impairments and $1.4 billion in discontinued operations, and it faces a $36 billion debt burden, much of which came from the Anadarko deal.

The debt load is forcing the company to slash costs, as CEO Vicki Hollub said the company had “significantly exceeded its cost-savings targets,” but the need to cut back on operating expenses could impair the company’s growth potential if and when oil prices do recover.

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8. Genesis Energy (down 75.4%)

Another entrant from the oil and gas sector, Genesis Energy (NYSE: GEL) has seen its stock fall more than 75% this year, capping off a slide since oil prices peaked in 2014.

The midstream master limited partnership saw operating cash flow and adjusted EBITDA decline about 25% in its most recent quarter, and the company cut its distribution to investors by 73% in the first quarter -- a problem as investors expect most returns from an MLP to come in the form of distributions. It also had a net loss of $326.7 million in the second quarter, though $277.5 million of that was due to asset impairments related to onshore facilities and its transportation segment.

Genesis offers a 12.7% distribution yield, making it a potentially phenomenal income stock, but investors seem to be skeptical that the company can support those payments given the challenges it’s facing from the pandemic and in the broader oil and gas industry.

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Offshore oil rig

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7. Kosmos Energy (down 76.5%)

Offshore oil drilling has been hit especially hard during the pandemic, so it’s not a surprise to find Kosmos Energy (NYSE: KOS), a deepwater exploration and production company, on this list.

In its most recent quarter, the company reported a net loss of $199 million, and revenue declined 68% to $127.3 million. In September, after the quarter ended, the company also entered into an agreement with a subsidiary of Royal Dutch Shell to sell as much as $200 million worth of offshore exploration assets to help free up cash for Kosmos.

The company was also forced to cut what had been a lucrative dividend, adding to the stock’s slide in March.

ALSO READ: 3 Dividend Stocks You Can Safely Hold for Decades

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Oil refinery

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6. PBF Energy (down 77.1%)

Like other energy stocks, PBF Energy (NYSE: PBF) shares plunged during the March crash and have yet to recover. PBF operates in refining and logistics, and the company reported an adjusted operating loss of $433.7 million in the second quarter, with a 61.7% decline in revenue to $2.52 billion.

Through the first half of 2020, the company’s debt doubled to $4 billion as it sought to boost its liquidity to manage through the crisis. It also cut its capital expenditures by more than 50% for the year and has taken other cost-saving measures to conserve more than $250 million.

Still, investors are clearly nervous about the company’s long-term prospects given the uncertainty around the pandemic and that OPEC recently slashed its demand forecast for the rest of this year and 2021.

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.

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Worker and oil pumpjack at sunset

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5. Talos Energy (down 79.1%)

Shares of another exploration and production company, Talos Energy (NYSE: TALO), were already in trouble before the pandemic hit. The stock had surged at the end of 2019 after the company announced an acquisition in the Gulf of Mexico, but that deal proved to be poorly timed and the stock started falling at the beginning of the year.

In the second quarter, Talos reported a loss of $140.6 million, or $29.4 million after adjustments, and revenue fell 69% to $88.9 million.

Like its peers, Talos has taken steps to reduce costs, shore up its debt profile, and shut down unprofitable production. Debt has climbed to nearly $1 billion, but the company is also making moves to grow long term, including acquisitions, indicating it may be in a stronger position than many of the companies on this list.

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Offshore oil rig at daybreak

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4. Vermillion Energy (down 80.1%)

Vermillion Energy (NYSE: VET) has been struggling for years, but the coronavirus pandemic and the oil crash have doused the Canadian exploration and production company’s prospects.

Vermillion was once a favorite among dividend investors, as the company distributed profits to shareholders on a monthly basis and its yield was nearly 15% late last year.

However, the crisis has forced Vermillion to scotch its dividend, eliminating the best reason to own the stock, as shares had been sliding since 2014. Through the first half of the year, the company has reported a loss of $1.4 billion, which seems to be due to a change in the value of assets, as funds from operations have remained positive. Revenue has fallen by 43% through the first half of the year to $521.3 million.

With the company focused on debt reduction in order to stabilize the balance sheet, the juicy dividend is unlikely to return anytime soon.

ALSO READ: Best Energy Stocks to Buy in 2020

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3. Amarin (down 80.5%)

The only biotech stock on this list, Amarin (Nasdaq: AMRN) has seen its shares plunge this year as performance of Vascepa, the sole product it has on the market, has disappointed. Biotech stocks tend to have high valuations, which make them volatile, so the disappointments around Vascepa have hit Amarin stock hard .

While revenue grew briskly through the first half of the year, sales actually slowed from the first quarter to the second, a warning sign. And the company reported a net loss for the first half of the year. It’s also faced challenges on the regulatory front. Rulings have favored generic manufacturers making their own knockoff versions of Vascepa, which is a fish oil supplement meant to be used in combination with statins to reduce the risk of heart attacks.

Additionally, European approval has likely been delayed until at least early 2021. While Amarin’s fortunes could reverse, it’s not surprising to see the stock plunge based on the challenges Vascepa has faced.

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2. Invesco Mortgage Capital (down 82.4%)

Invesco Mortgage Capital (NYSE: IVR), a real estate investment trust that specializes in investing in residential and commercial mortgage-backed securities, has fallen victim to upheaval in the real estate and mortgage market, which has led to massive losses from the company this year.

Sharply lower Treasury rates led to lower asset valuations, forcing the company into asset sales and eventually suspending margin payment and dividend payments to investors.

The effort to deleverage its investment portfolio led to what amounted to a fire sale as losses on investments led to a net loss of $1.62 billion in the first quarter. That process continued in the second quarter as Invesco reported a $300 million net loss.

The company also slashed its dividend payment from $0.50 a quarter to just $0.02, adding to investor woes.

Still, unlike oil and gas companies, Invesco’s industry is not fundamentally broken and is not getting disrupted. Invesco was a victim of its own making with excessive leverage, but with smart management the company should be able to get back on track.

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Offshore drilling rig

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1. Transocean (down 84%)

Transocean (NYSE: RIG), the offshore driller, has been nothing but a money pit in recent years. In addition to losing 84% of its value this year, the stock is down an incredible 98% over the last decade, wiping out about $30 billion in market value. The stock now trades at just around $1, in penny stock range like many of the other names on this list.

Since offshore drilling is among the most expensive forms of oil extraction, the contract driller struggles when prices plunge. Transocean has actually seen revenue rise this year, a reflection of the company’s earlier challenges, but losses have widened as it reported a net loss of $487 million in the second quarter -- though it said it nearly broke even without special items, including asset impairments.

With $8.5 billion in debt and substantial interest payments, which are on track to be more than $600 million this year, the company is in a deep hole that will be difficult to climb out of.

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.

Previous

Next

Dejected investor holds his face in his hands.

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A long list

It’s worth noting that dozens of companies have filed for bankruptcy this year, including a number of oil and gas companies, so there are several stocks that have done even worse this year than the ones listed above.

Still, the list is a reminder that sectors like oil and gas, which was already facing disruptive pressure from renewable energy and is at the mercy of commodity prices outside even the best operators’ control, are probably better off avoided.

While stocks have largely rebounded from their March lows, the coronavirus pandemic has shown little sign of abating. That means there could be a whole new set of stocks on this list by the end of the year.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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