These stocks dropped the most this year.
This year has been an absolute roller coaster for markets, as what looked to be a devastating year on Wall Street turned into a largely respectable one following the rally off of bear market lows. Several sectors have notably excelled — tech and consumer discretionary are both up more than 20% this year — while others fizzled. For example, the year-to-date losses for the financial and energy sectors are 21% and 51%, respectively. Investors have seen companies like J.C. Penney and Hertz (ticker: HTZ) declare bankruptcy, but which companies that are both fairly large and still afloat have performed the worst? Here are seven stocks that have dropped the most in 2020, all of which have a market cap of $2 billion or more. Are these companies value opportunities or still problematic?
Occidental Petroleum Corp. (OXY)
It’s perhaps appropriate that topping the list of stocks that have dropped the most in 2020 is oil and natural gas producer Occidental Petroleum, which hails from the worst-performing sector in the market. In a year when oil prices briefly turned negative, it’s no surprise that OXY has dramatically underperformed. The company has lost money in the last four consecutive quarters and had to take a monstrous $6.6 billion write-down charge last quarter due to the cratering value of its oil and gas assets.
Market capitalization: $9.4 billion
Year-to-date performance: -76%
Beauty product retailer Coty has also had an incredibly tough year, as the combination of its unsound balance sheet and the pandemic’s hit on sales combined to wreak havoc. The company was forced to divest 60% of its professional hair and beauty business in a sale to private equity powerhouse KKR (KKR) earlier this year, raising about $3 billion in an effort to shore up debt. The deal telegraphs the dire straits the business has been in this year; the company will have to scale down before it builds back up. Revenue plunged 56% last quarter as the company lost $386 million. Coty’s net debt, which is defined as total debt minus cash and equivalents, was roughly $7.84 billion.
Market cap: $2.2 billion
YTD performance: -74%
Marathon Oil Corp. (MRO)
Another laggard from the energy sector, Marathon Oil is a Houston exploration and production company that was, in some ways, an inevitable casualty of 2020’s epic energy bear market. Due to the combination of a global supply glut and cratering demand as the pandemic hit economies around the world, Marathon announced a pause on production in the Permian Basin while also suspending its dividend and share buybacks. MRO announced at the beginning of October that it would be reinstituting its quarterly dividend, although the new quarterly dividend will be 3 cents per share versus the previous amount of 5 cents per share. In the company’s last quarterly report, MRO sounded confident that it could break even on a free cash flow basis with oil prices in the $30 to $35 a barrel range — an ambitious target that would be good news for investors if true.
Market cap: $3.1 billion
YTD performance: -69%
It’s not just oil and gas explorers and producers among the stocks that have dropped the most in 2020, but companies that provide equipment and services to the energy industry as well, such as U.K.-based TechnipFMC. FTI makes and services the sort of high-tech, capital-intensive machinery that producers use to drill for oil offshore, on land and in shallow water. It also builds systems for the treatment and transportation of oil and natural gas, and each of these areas has been an area where FTI customers have cut back spending dramatically throughout an industry-wide effort to curb capital expenditures and reduce costs swiftly. Just as investors in companies like Boeing (BA) or Lockheed Martin (LMT) use orders and backlogs to gauge future prospects, FTI investors do, too. As of last quarter, those numbers looked fairly grisly, with inbound orders falling to 86% year over year from $11.2 billion to $1.53 billion.
Market cap: $2.8 billion
YTD performance: -70%
Carnival Corp. (CCL)
It’s no secret that the cruise business has suffered a horrific 2020. It was one of the first and hardest-hit parts of the market, as cruises turned out to be perfect incubators and spreaders of the virus across the world. Analysts expect a 71% decline in revenue this year from Carnival, and even if their projections for a 70% rebound in 2021 revenue come true, Carnival’s 2021 sales will still only be about half of what they were in 2019. With the customer discounts and costly safety precautions needed to reinvigorate demand going forward, it’s unlikely margins (or even the hint of profits) will come back to CCL in the foreseeable future. It’s entirely rational that shares have declined so precipitously this year to reflect that.
Market cap: $10.5 billion
YTD performance: -70%
Norwegian Cruise Line Holdings (NCLH)
Another cruise operator, Norwegian Cruise Line Holdings, also finds itself among the major stocks that have dropped the most in 2020. Facing the same issues as Carnival — including a crushing “no sail” order from the U.S. Centers for Disease Control and Prevention that began on March 14 and is still effective — NCLH is essentially in the game of trying to stay healthy enough financially to stick around until business resumes, whenever that is. Due to the “no sail” order, analysts expect revenue to all but disappear in the third quarter, falling from $1.91 billion to less than $11 million year over year. The company raised $1.5 billion in debt July and believes it’s well-positioned to weather a sailing ban for the time being, although its balance sheet is a bit more worrisome than Carnival, with a debt-to-equity ratio above 2.3.
Market cap: $4.8 billion
YTD performance: -70%
Sabre Corp. (SABR)
Like many of the other stocks that have dropped the most in 2020, Sabre Corp. operates in precisely the areas of the economy you wouldn’t want exposure to in the last year. Although technically a tech stock, Sabre’s niche targeting of customers is what has done it in; SABR provides tech solutions to the travel, airline and hospitality industries. This doomed triumvirate is reflected in SABR’s most recent quarterly report, with revenue tumbling by 93%, clocking in at $83 million compared with $1 billion the year before. The net loss last quarter was $444 million against that $83 million in revenue, a crazy decline from the net income of $28 million a year before. After making $1.01 per share in 2019, analysts don’t expect SABR to turn a profit again until 2022 when they foresee earnings per share at 18 cents. It’s a long road back for Sabre stock.
Market cap: $2.1 billion
YTD performance: -69%
Seven badly hit stocks in 2020:
— Occidental Petroleum Corp. (OXY)
— Coty (COTY)
— Marathon Oil Corp. (MRO)
— TechnipFMC (FTI)
— Carnival Corp. (CCL)
— Norwegian Cruise Line Holdings (NCLH)
— Sabre Corp. (SABR)
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