Are these 5 defeated Nasdaq shares ready to rise in 2021?

During the past year, the Nasdaq Composite index rose 45%. Most of the gains can be attributed to actions that performed well in the remote and domestic work environments of the COVID-19 pandemic.

There are many Nasdaq stocks that have not come close to the performance of the overall index, mainly because of the pandemic-related business disruption. However, some may be ready to manifest themselves once the pandemic is over. Here are five in particular to put on your radar.

Image source: Getty Images.

5 Nasdaq shares underperforming

There are literally hundreds of underperforming Nasdaq shares. After all, by definition, about half of all stocks underperform and half outperform. But here are five that performed particularly poorly last year, and for good reason, along with the performance of the S&P 500 and Nasdaq Composite benchmarks.

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

Why did these actions perform so poorly?

As mentioned earlier in the chart, all of these outperformed the stock market for good reasons. And not surprisingly, it is mainly due to the pandemic. To summarize the reasons:

• Lamar Advertising invests in billboards and other outdoor advertising structures, especially image ads on transit systems. With fewer people going to work and traveling in the last year, many companies have stepped on the brake on spending on outdoor advertising.
• Marriott International manages and franchises hotels around the world, and it’s not hard to find out why this wasn’t a big deal during the pandemic. In many cases, hotels are operating with a small fraction of their pre-pandemic occupation.
• Wynn Resorts has gaming resorts in Las Vegas and Macau, among other markets. Casinos were forced to close in the early days of the pandemic, and while most have reopened, leisure travel is far from normal levels.
• Caretrust REIT is a real estate investment fund that owns and operates specialized nursing facilities, whose residents have been dramatically affected by the pandemic. Elderly changes have not recovered and are unlikely to return to pre-pandemic levels for some time.
• Dave and Busters runs family entertainment centers. Many have reopened, but some are still closed, including almost all of its units in New York and California.

Will they perform better in 2021 and beyond?

The point is that these five companies have been hit hard by the COVID-19 pandemic, but they can also benefit tremendously when things (hopefully) start to return to normal in 2021. Despite the 2020 remote work trend, studies have indicated that most people want to work in offices, at least on a part-time basis, which would be good news for the outside advertising industry.

Leisure travel has also increased dramatically since the early days of the pandemic. As vaccine implantation increases, this should only continue to increase. Many families are experiencing downtime during the winter season, but there is a huge pent-up demand for family entertainment centers, such as those offered by Dave & Busters. Last but certainly not least, although the elderly housing sector will certainly take some time to normalize, the older age groups in the population are still growing rapidly, so this must be a long-tail growth sector in decades to come.

The bottom line is that some of the companies most affected by the pandemic may be long-term bargains for patient investors. I cannot say with 100% certainty that all of this will increase in 2021, although I think that everyone is likely to increase as soon as the pandemic numbers start to fall. But they are all well-run companies that should have a bright future, so they could be smart actions to consider in your portfolio while still performing poorly.