The 10 Worst Stocks in the Nasdaq in 2016

By Dan Caplinger Markets Fool.com

The Nasdaq 100 Index underperformed most other major stock market benchmarks in 2016, producing gains of just 6%, compared to double-digit percentage returns for broader indexes like the S&P 500. Although some Nasdaq 100 stocks gave their investors incredibly strong returns, there were many stocks that weighed the index down in 2016. Below, we'll look at the 10 worst performers in the Nasdaq 100 in 2016 and whether they're likely to remain weak going into 2017.

Continue Reading Below

Stock

2016 Return

Liberty LiLAC Group (NASDAQ: LILAK)

(50.8%)

TripAdvisor

(45.6%)

Vertex Pharmaceuticals

(41.5%)

Alexion Pharmaceuticals

(35.9%)

Illumina

(33.3%)

Regeneron Pharmaceuticals (NASDAQ: REGN)

(32.4%)

Mylan

(29.4%)

Gilead Sciences (NASDAQ: GILD)

(27.6%)

Norwegian Cruise Line Holdings (NASDAQ: NCLH)

(27.4%)

QVC Group

(26.9%)

Source: S&P Global Market Intelligence.

Most people think of the Nasdaq 100 as being particularly heavily weighted in technology stocks. Interestingly, not one pure technology stock made it on the list of worst performers in the Nasdaq this year. Instead, the vast majority of bottom performers came from the pharmaceutical and biotechnology world.


Image source: Getty Images.

These stocks made investors ill

Continue Reading Below

As you can see above, fully six of the 10 worst stocks in the Nasdaq in 2016 came from the healthcare arena. The fact that biotechnology stocks would make the list is hardly unheard of, especially given the extent to which such companies often rely on a small number of potential blockbuster treatments. When the prospects for those treatments go well, then share prices can soar. When they go poorly, however, falling stock prices are usually the result.

Yet what is surprising is the size of the companies involved. Gilead had a market cap of more than $100 billion for much of 2016, but its poor performance stemmed largely from concerns about its ability to sustain prices of its blockbuster hepatitis C treatments in light of competition from rival drug-makers. Moreover, Gilead didn't have a good year with its pipeline of candidate treatments, and several setbacks came as a shock to investors. Combine that with the loss of a patent infringement trial, and Gilead simply had a bad year in 2016.

Meanwhile, Regeneron saw large losses near the beginning of the year and was never able to recover. An ongoing patent-infringement battle with Amgen led to an injunction earlier this month against Regeneron's Praluent cholesterol-fighting drug. Moreover, slowing sales gains of its key Eylea drug for macular degeneration has made investors nervous about its future growth potential.

When you take those company-specific issues and combine them with a generally unfavorable political environment for drug-making companies, it adds up to the bad environment that explains the poor showing from the Nasdaq 100's pharma and biotech contingent.

What else held the Nasdaq back?

Outside healthcare, some other company-specific issues weighed on the year's losers. Liberty LiLAC, which is a tracking stock for Liberty Media's Latin American and Caribbean cable operations, posted a big decline in November following its third-quarter earnings. The company said that its results were below expectations, but Liberty was positive about the unit's future prospects, predicting better growth potential going forward. Moreover, the merger with Cable & Wireless Communications should also boost the division's prospects, albeit having come with a sizable price tag. Liberty unit QVC was also among the worst performers of the year.

Meanwhile, poor demand hurt Norwegian Cruise Line Holdings throughout much of the year. The Brexit decision in the U.K. to leave the European Union hurt the value of the British pound, and that weighed on the number of cruise ship customers there. Cyclical ups and downs are common in the cruise industry, but Norwegian Cruise Line seemed particularly susceptible to threats to high-end luxury consumers.

The Nasdaq 100 didn't live up to the promise of other stock market benchmarks in 2016, and these 10 stocks were a big part of the reason why. If conditions in the pharmaceutical and biotech market improve in 2017, then it will go a long way toward reversing some of the damage done to the industry last year. Moreover, it would improve the chances that the Nasdaq 100 will bounce back and outperform the Dow and S&P 500 this year.

10 stocks we like better than Gilead Sciences
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Gilead Sciences wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of January 4, 2017

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Gilead Sciences, Illumina, and TripAdvisor. The Motley Fool recommends Liberty LiLAC Group, Mylan, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.