Even though the market indexes rallied last week on a stellar start to the third-quarter earnings season, inflation and supply chain concerns are worrying investors. So, we think it could be wise to avoid Carvana (CVNA), Robinhood (NASDAQ:HOOD), and Royal Caribbean Cruises (NYSE:RCL) now because they look significantly overvalued. Moreover, they are rated ‘Strong Sell’ in our proprietary rating system. Read on.The major stock market indexes rallied last week thanks to a solid start to the third-quarter earnings season. According to a Factset report, 80% of the S&P 500 companies that have so far reported third-quarter results have beaten EPS estimates, which is above the 76% five-year average.
However, rising Treasury yields, high inflation, and supply chain constraints continue to worry investors. In addition, The Goldman Sachs Group , Inc. (NYSE:GS) cut its U.S. economic growth target to 5.6% for 2021 and 4% for 2022 due to an expected decline in fiscal support through the end of next year and a more delayed recovery in consumer spending than previously expected.
Against this backdrop, we think it could be wise to avoid Carvana Co. (NYSE:CVNA), Robinhood Markets , Inc. (HOOD), and Royal Caribbean Cruises Ltd. (RCL). The valuations of these stocks are not in sync with their growth prospects. Moreover, these stocks are rated F (Strong Sell) in our POWR Ratings system.