9 Worst-Performing Stocks Of 2020: Buy, Sell Or Hold?

The S&P 500 has rallied hard off its March lows, but the index remains down 12.4% year-to-date overall. The near-term economic outlook amid the COVID-19 shutdown is still unclear, creating a lot of uncertainty on Wall Street. The International Monetary Fund cut its 2020 global economic growth forecast to negative 3% this week.

A number of stocks have been hit much harder than the 12.4% overall market decline. Some of those stocks will ultimately prove excellent long-term buying opportunities. Some of them will end up dropping significantly lower.

Here’s what analysts have to say about the nine worst-performing S&P 500 stocks of 2020.

Norwegian Cruise Line Holdings Ltd NCLH - Hold

Norgwegian has been the single worst-performing stock in the entire S&P 500 in 2020, dropping 80.5% year-to-date.

The cruise line industry has been one of the hardest-hit industries from the coronavirus outbreak. Not only is the cruise business shut down indefinitely, there is uncertainty about how long it will take the business to recover and how significant that recovery will be. Norwegian shares may look cheap down 80%, but Bank of America analyst Andrew Didora says there is simply too much uncertainty to be aggressively buying the dip.

Bank of America has a Neutral rating and $18 price target for NCLH stock.

See Also: 8 Stocks To Sell Into The Market Rally

Diamond Offshore Drilling Inc DO - Sell

The next hardest-hit S&P 500 stock of 2020 is offshore oil driller Diamond Offshore, which is down 77.7% year-to-date.

Global travel restrictions and stay-at-home orders have completely wiped out oil demand. At the same time, a pricing war between Russia and Saudi Arabia pushed oil prices to their lowest level in 20 years.

Bank of America analyst Chase Mulvehill says oil prices will likely remain depressed in the near-term, U.S. oil services companies will have a distressed environment for the rest of 2020 and recovery in the global oil market will likely not happen until 2022.

Bank of America has an Underperform rating and 25-cent price target for DO stock.

Carnival Corp CCL - Hold

Not surprisingly, cruise giant Carnival is another one of the market’s worst performers of 2020, down 77.3% year-to-date.

Analyst Geoffrey d'Halluin says the cruise industry has been severely impacted by COVID-19, but Carnival’s recent $6.3 billion offering brings its total liquidity to around $18 billion, giving it plenty of breathing room for the time being. The new capital comes at a high cost, but he says it should be enough for Carnival to make it through the end of the year at least.

Bank of America has a Neutral rating and $10 price target for CCL stock.

Royal Caribbean Cruises Ltd RCL - Sell

Like the other cruise lines, Didora says Royal Caribbean is facing plenty of near-term risk. Unfortunately, Didora says Royal Caribbean’s financial situation is more uncertain than its peers, making it reliant on the commercial paper market and/or bank flexibility in the near-term.

The stock is already down 75% on the year, but Didora says there is risk the worst is yet to come for Royal Caribbean. Like its peers, Royal Caribbean has suspended its dividend to shore up its balance sheet, but with all cruises suspended indefinitely, it may not be enough.

Bank of America has an Underperform rating and $25 price target for RCL stock.

Noble Energy, Inc. NBL - Buy

Noble is one of the hardest-hit large oil & gas exploration and production stocks of the year, down 70.9% year-to-date.

Fortunately for investors, Bank of America analyst Doug Leggate says Noble is one of the few stocks among the worst performers of the year that investors should be scooping up on the dip. Leggate says the focus in the E&P space, for the time being, will be balance sheets and liquidity and even Noble has expressed confidence in its credit facilities.

Bank of America has a Buy rating and $9 price target for NBL stock.

Alliance Data Systems Corporation ADS - Hold

Given the stock is down 68% year-to-date, Alliance recently hosted an investor update call to ease concerns about the company’s ability to weather the COVID-19 storm.

Bank of America analyst Ryan Cary says ADS management acknowledged March sales took a hit, but said sales trends should improve within a matter of months. Cary also says management likely eased investor nervousness about its leverage ratio, which was only 1.6 times at the end of 2019. However, Cary says until ADS reduces its Holdco debt and simplifies its financial disclosures, the stock may have limited upside.

Bank of America has a Neutral rating and $111 price target for ADS stock.

Halliburton Company HAL - Hold

Oil services giant Halliburton is down 67.9% in 2020.

Mulvehill says U.S. onshore well completion could drop by 70% in the second quarter and continue into the third quarter. He is protecting horizontal well completion rates will stabilize at around 300 per month by the end of the year, down from 1,200 per month in 2019. Even once activity starts to pick back up in 2021, Bank of America is projecting only 500 wells per month by the middle of next year, around 40% of 2019 levels.

Bank of America has a Neutral rating and $9 price target for HAL stock.

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Apache Corporation APA - Buy

Apache shares are down 68.4% in 2020, but Leggate says the market is significantly undervaluing the company at its current price.

Leggate says Apache’s assets generate significant cash flow. In fact, he estimates Apache is currently trading at half the value of its Suriname property alone, net-of-debt. Apache’s debt is likely spooking investors, but Leggate says its balance sheet has the flexibility to navigate the crisis and the company has an undrawn $4 billion credit facility. In fact, 80% of its debt matures after 2029.

Bank of America has a Buy rating and $20 price target for APA stock.

Marathon Oil Corporation MRO - Sell

Leggate says Marathon’s U.S. share business will be challenged in the near term. Bank of America doesn’t see any immediate risk to the stock’s 4.6% dividend, but generally says cuts to corporate buybacks will be companies’ first line of defense against liquidity crunches.

Even after a historic OPEC production cut announced earlier this month, WTI crude prices remain below $21 per barrel. While its balance sheet is strong, there is no clear bullish catalyst for the stock.

Bank of America has an Underperform rating and a $3.50 price target for MRO stock.