Companies in almost every industry have struggled over the last year as a result of the COVID-19 pandemic. While many stocks bounced back quickly, others are taking a little bit longer to return to their pre-pandemic glory.
However, many stocks that are struggling right now actually have huge potential for strong returns later in 2021 or 2022. Governments around the world are distributing the COVID-19 vaccine and loosening restrictions, which means the economy can finally start to recover.
Additionally, many of these businesses are learning to adapt to the challenges of the pandemic and find new revenue streams. We’ve rounded up some of the most promising beaten down stocks right now to add to your portfolio.
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Best Beaten Down Stocks To Buy
Coty Inc. (NYSE: COTY)
Coty is one of the world’s largest beauty conglomerates. This holding company owns approximately 77 different makeup, hair, fragrance, and skincare brands around the world.
Francois Coty founded the company in 1904, so they have a very long history. They grew significantly in 2016 when they acquired 41 brands from Proctor and Gamble. They also have partnerships with a wide variety of respected designer brands.
This company has struggled over the past year due to the economic downturn. Many consumers haven’t had the disposable income to spend on their favorite beauty products.
However, Coty’s share prices have been slowly improving over the last several months. In February, the company’s earnings report indicated that their EPS estimates were significantly higher than expected, although their revenue numbers still struggled.
Coty’s stock price took a nosedive at the beginning of the pandemic and stayed that way until November, when it started to rise again. While it still hasn’t fully recovered, this recent growth looks very promising.
As the economy improves and people start socializing more, it’s likely that demand for beauty products will increase. Since Coty is one of the world’s biggest beauty stocks, it could be worth adding to your portfolio for the long term.
Under Armour (NYSE: UAA)
Under Armour is a very popular brand for sportswear and athletic equipment. Despite their huge name recognition, the company struggled when COVID-19 hit. Many people weren’t playing their favorite sports anymore because of government restrictions and therefore weren’t buying sporting goods.
Although things initially looked bleak for investors, the company’s stock price slowly started improving in the third quarter of 2020. Investors saw a huge boost again at the beginning of February when the company released their earnings report.
This is because experts had predicted that Under Armour would lose money, but instead data indicated that they were profitable. This surprisingly positive financial performance indicated that the company is recovering much more quickly than expected.
Under Armour also recently appointed a new management team to improve their finances. With such a strong brand identity, this is definitely a stock to add to your portfolio for the years to come.
Most Beaten Down Stocks
Boeing Company (NYSE: BA)
Even before the stock market crash in March 2020, Boeing was struggling. Their new 737 MAX model was involved in a few disastrous accidents, which resulted in an FAA investigation and subsequent grounding.
When the pandemic hit and countries started restricting travel, investors started selling their Boeing stock. Even as the market has been improving, Boeing has still struggled to recover, likely because of negative media coverage.
However, Boeing is one of the world’s foremost aircraft manufacturers, and they’re unlikely to struggle for long. In fact, now may be the right time to buy the stock as a relatively low price.
After making the necessary safety improvements, the 737 MAX is back in the air. United Airlines just placed a large order for the planes, which sent shares up in price.
While it will likely take some time for Boeing to return to its pre-pandemic price point, it seems that there’s potential for this stock to deliver good returns despite current travel restrictions. This will likely depend on the orders Boeing receives and if they can keep their earnings up.
Beaten Down Stocks With Potential
Simon Property Group (NYSE: SPG)
Simon Property Group is a real estate investment trust focused on retail properties. They are based in Indianapolis, but have properties all over the US. They also have properties in Canada and Japan.
Most of SPG’s properties are malls or other retail developments that were affected by the shutdowns last year. Some properties had to close altogether, while others had to limit their operations. As a result, SPG stock took a huge hit.
It’s only been over the past few months that the stock has started to recover. COVID-19 cases are dropping off in many parts of the US, which means that Simon’s properties can reopen more fully.
Simon’s properties also tend to feature luxury stores and popular restaurants. They also own several outlet malls where consumers can find great deals. While some investors have worried about the state of malls in general, Simon will likely continue to be successful because of their consumer appeal.
Beaten Down Energy Stocks
OneOK Inc. (NYSE: OKE)
OneOK is a natural gas company based in Oklahoma. The energy industry has faced a number of unique challenges over the past year. Demand for natural gas is down, and many people are looking for renewable alternatives in an effort to combat climate change.
Despite these challenges, many investors are feeling optimistic about OneOK. They recently reported their fourth quarter and annual earnings for 2020. Their earnings actually rose year over year, and results from their natural gas liquids segment were particularly good.
This is all despite lower production rates this year as a result of the pandemic. With a likely increase in production this year, we could see strong returns later in 2021.
Additionally, OneOK is an excellent dividend stock, with a yield of 7.92 percent. This makes it a good choice for income investors.
Beaten Down Oil Stocks
ConocoPhillips (NYSE: COP)
ConocoPhillips is an oil and gas company based in Texas. They also have operations in 17 countries around the world.
This company’s shares dropped at the beginning of the pandemic, as so many people weren’t driving. Many people are also looking for more sustainable long-term transportation solutions, which reduces demand for gas.
However, their stock price finally started to recover in November and has been on an upward trajectory since then. There are a few reasons for this, but much of it has to do with an increase in oil prices. Higher oil prices typically mean higher earnings for companies like ConocoPhillips in the long run.
ConocoPhillips also beat earnings estimates in the fourth quarter, which had a positive effect on their stock price. They’re taking steps to keep their expenses in check and manage their cash flow, which should help them weather the turbulent oil market.
Beaten Down Dividend Stocks
Delta Airlines (NYSE: DAL)
The entire airline industry has had to reinvent itself this year, and Delta Airlines is no exception. International travel is severely limited, and many consumers are avoiding unnecessary business and leisure travel.
Delta shares struggled on the market for several months, but they seem to finally be making a recovery. Most airline stocks jumped up in price at the beginning of February, as cases started dropping and vaccine distribution became more effective.
There are multiple reasons to consider Delta over other airlines. They’ve decided to block middle seats on their flights through the end of March, while all other US airlines have started selling middle seats again.
This is very appealing for customers who are COVID-cautious and want a bit of extra personal space from the people around them. This extra commitment to customers sets Delta apart and makes them one to watch.
Delta has a relatively high dividend yield as well, at 3.32 percent. If you use an income investing strategy, this stock could be one to watch as the travel industry recovers.
Should You Buy Beaten Down Stocks?
With everything that’s happened over the past year, it may seem counterintuitive to invest in stocks that are struggling. However, the economy is changing quickly, and investing in these stocks now could result in huge returns in the long run.
However, it’s important to consider a company’s business model before investing. How are they adapting their products and marketing techniques to meet customer demands? Companies that are resilient tend to make the best long term investments.
Earnings reports are often a good indication of a stock’s long-term viability. Check to see how their earnings per share and revenue numbers compare to analyst projections. If a company is consistently beating their analyst projections, it’s a good indication that they are on the right track, even if their revenue has gone down year over year.
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Beaten Down Stocks: Final Thoughts
The economy is cyclical, and just because a company is down now doesn’t mean it can’t recover later. Buying these beaten down stocks now while they’re cheap can set you up for strong returns down the line.