Are These 5 Crashed Nasdaq Stocks Ready to Rise in 2021?

Over the past year, the Nasdaq Composite Index is up 45%. Most of the gains can be attributed to stocks that have thrived in the stay-home and remote working environments of the COVID-19 pandemic.

There are many Nasdaq stocks that are nowhere near the performance of the overall index, mainly due to pandemic-related business interruptions. However, some may be willing to recover once the pandemic is over. Here are five in particular to put on your radar.

Image Source: Getty Images.

5 Nasdaq stocks that have underperformed

There are literally hundreds of Nasdaq stocks that have underperformed. By definition, about half of all stocks by definition perform worse or half better. But here are five that have performed particularly poorly over the past year, and for good reasons, along with how the S&P 500 and Nasdaq Composite benchmark indices have performed.

Data source: Ycharts. Returns from 2/1/2021.

Why have these stocks fared so badly?

As mentioned earlier in the chart, these have all underperformed the stock market for good reasons. And not surprisingly, this is mainly due to the pandemic. To briefly mention the reasons:

• Lamar Advertising invests in billboards and other outdoor advertising structures, particularly display advertising in transportation systems. With fewer people going to work and traveling in the past year, many companies have slowed down spending on outdoor advertising.
• Marriott International operates and franchises hotels around the world, and it’s not hard to see why this wasn’t a great business during the pandemic. In many cases, hotels run for a small portion of their pre-pandemic occupancy rate.
• Wynn Resorts owns gambling resorts in Las Vegas and Macau, among others. Casinos were forced to close in the early days of the pandemic, and while most have reopened, leisure travel is far from normal.
• Caretrust REIT is a real estate investment fund that owns and operates skilled nursing homes whose residents were dramatically affected by the pandemic. Seniors relocations have not recovered and are unlikely to return to pre-pandemic levels for some time to come.
• Dave & Busters runs family entertainment centers. Many have reopened, but there are quite a few that are still closed, including nearly all locations in New York and California.

Will they do better in 2021 and beyond?

The thing is, these five companies were badly affected by the COVID-19 pandemic, but could also benefit immensely if things start to return to normal (hopefully) in 2021. Despite the 2020 trend of remote working, studies have shown that people want to work in offices, at least on a part-time basis, which would be good news for the outdoor advertising industry.

Vacation travel has also made quite some progress since the early days of the pandemic. As the introduction of vaccines increases, this should only continue to increase. Many families are low during the winter season, but family entertainment centers such as those offered by Dave & Busters are in huge demand. Last but certainly not least, while the senior housing sector certainly needs some time to normalize, the older age groups of the population are still growing rapidly, so this should be a long-tailed growth sector for the next few decades.

The bottom line is that some of the companies most affected by the pandemic could be long-term bargains for patient investors. I can’t say with 100% certainty that all of this will increase in 2021, although I think they will probably all get a lift once the pandemic numbers start to decline. But they are all well run companies that should have a bright future, so they could be smart stocks to consider for your portfolio while still underperforming.