Buy 3 stocks that were losers in 2021 for 2022
This year was a special one for the stock exchange. The most important underlying factors, of course, are the stages of the pandemic. The world got some good news when several effective vaccines were developed and over 8 billion doses have been given at the time of this writing.
This allowed governments that locked economies in 2020 to begin reopening large business activities. Still, stopping and starting trillion dollar economies is not easy, and bottlenecks have emerged which have slowed progress. As a result, the stock market diverged and some companies ended up winners in 2021 while others were less fortunate.
Walt Disney (NYSE: DIS), fuboTV (NYSE: FUBO), and Chegg (NYSE: CHGG) were in the latter group in 2021, but could do better in 2022.
You’d think Disney stock did well in 2021, considering the company reopened many of its previously closed stores. But you’d be wrong
Theme parks, hotels, resorts, cruise ships and cinemas are lucrative sources of income and profits for The House of Mouse, which were severely restricted in 2020 and given more freedom of action in 2021. Indeed, revenue for the segment that includes theme parks rose to $ 5.5 billion for the fourth quarter (which ended October 2), up from $ 2.7 billion a year earlier.
Still, Disney stock is down 15% year-to-date in 2021. That’s because its streaming services haven’t done as well this year compared to last year. But as more people get vaccinated, Disney’s content production machine spins up and management expects new content to spur subscriber growth in 2022.
Like Disney, fuboTV had a better year in 2020 than it did in 2021. The cable TV streaming replacement thrived at the start of the pandemic when millions of people looked for in-home entertainment. On the contrary, the company had to increase the amount of content it offered in order to entice subscribers to join as the economies reopen in 2021.
The result was an increase in content expenditure, which was not offset by a sufficient increase in the average revenue per user.
However, with the growth of fuboTV, the subscriber-related expenses are being used by more viewers. The key figure fell from 122% of sales in 2019 to 100% in 2020 to 91.5% in 2021. And the company is growing rapidly in subscribers, from 316,000 in 2019 to 548,000 in 2020 to an estimated 1.065 million in 2021.
The stock fell 29% in 2021 but could do better in 2022 if the number of subscribers continues to grow at the current pace.
One of the first measures taken by governments at the start of the pandemic was to send home millions of students around the world. The classrooms moved out of the schoolyards and into online video calls. With the college campus closed, students lost access to several valuable resources such as the school library, personal tutoring, and personal consultation hours with their professors, increasing the demand for the online student help platform Chegg. The company soared in 2020 as its revenue growth doubled to 56.8% year over year.
However, when colleges began recalling students to physical classrooms in 2021, an interesting trend emerged: fewer students were attending college, and those who did so were taking fewer courses. It’s not hard to see that students (vaccinated or not) are not yet comfortable returning to classrooms that are still high in levels of COVID. That doesn’t bode well for Chegg, of course, which is why its stock is down 68% in 2021.
However, the company has a chance to do well in 2022. Students can only postpone their compulsory courses to a limited extent. In addition, Chegg’s 70+ million proprietary content is helpful for students whether they are taking a course online or in person.
Disney, fuboTV, and Chegg were each hammered in 2021 mainly because of the ongoing effects of the pandemic. That being said, everyone is in an excellent position to become a winner in 2022 and beyond.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.