Can These 4 Stock Market Laggards Bounce Back in 2021?

2020 is finally coming to a close, and Wall Street seems poised to end the year on a relatively quiet note. The Dow Jones Industrial Average (DJINDICES:^DJI), S&P 500 (SNPINDEX:^GSPC), and Nasdaq Composite (NASDAQINDEX:^IXIC) managed to post modest gains on Wednesday, recovering some lost ground and helping the Dow set a record high.


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Data source: Yahoo! Finance.

The stock market overall has done incredibly well this year, especially given all the challenges that the world has faced. Yet amid the hype over some extraordinary performances from certain sectors, many lagging stocks have almost been forgotten. In particular, the S&P 500 has had four stocks lose more than half their value in 2020 — and many wonder whether the future prospects for these companies are any better than what the past year has given them. Below, we’ll look at these four stocks to see whether they’re good turnaround candidates for 2021.

Image source: Getty Images.

Cruisin’ for a bruisin’

The four worst S&P 500 performers come from two industries. Cruise ship operators took a lot of punishment in 2020, and that sent Carnival (NYSE:CCL) and Norwegian Cruise Line Holdings (NYSE:NCLH) to big declines. Meanwhile, with oil prices struggling, energy companies like exploration and production giant Occidental Petroleum (NYSE:OXY) and oil-field services specialist TechnipFMC (NYSE:FTI) were among dozens of businesses posting terrible losses in 2020.

OXY data by YCharts.

Among the cruise stocks, both Norwegian and Carnival have had to take extreme measures throughout 2020 to stay afloat. Massive capital raising has dramatically increased debt levels and diluted the interests of longtime shareholders. As a result, even when a recovery comes, shareholders won’t necessarily see the full benefits. It might be difficult for the stocks to come close to matching their pre-coronavirus levels — especially if more delays put off the time at which ships can set sail once again.

Searching for energy

Arguably, the prospects for Occidental, TechnipFMC, and the rest of the energy sector look more favorable. After all, oil prices are getting close to $50 per barrel, and while that’s still down considerably from the triple-digit days of the early 2010s, it nevertheless allows for economical production for many of the industry’s best companies.

Occidental has gone through a big transformation recently, with its massive purchase of Anadarko Petroleum prompting it to sell off noncore assets in other areas. That still leaves Occidental with blemishes on its balance sheet, but if oil can rise further, the company might finally be able to restructure its debt successfully and buy itself the time it needs to recover fully.

For TechnipFMC, meanwhile, cost-cutting efforts have been going on for some time, but the subsea, offshore, onshore, and surface project management solutions provider has started to see an uptick in projects. That’s important, because if exploration and production companies can finally get some positive momentum, it would mean a lot more business not just for E&Ps themselves, but also for the wide array of supporting companies that offer oil-field services and equipment.

Looking forward to 2021

Of these groups, energy has a better chance of recovering fully than cruise ship stocks. It’d take extreme measures to bring companies like Norwegian and Carnival back to their former glory. For energy specialists like TechnipFMC and Occidental, though, some of the trends appear already to be in place for a rebound in 2021.