Rocket Companies (RKT) and UWM (UWMC) have been on the radar of Reddit forum wallstreetbets (WSB) thanks to the financial services industry’s improving prospects with the economic recovery this year. However, their bleak current financials and growth potential make them highly speculative bets. So, we think these two stocks are best avoided now.The financial services industry has seen solid growth this year thanks to the fast-paced economic recovery and rising financial activities by individuals and businesses. The industry’s promising outlook has proved appealing to investors, as evidenced by the Financial Select Sector SPDR ETF's (NYSE:XLF) 60.7% returns year-to-date, compared to SPDR S&P 500 ETF Trust’s (SPY) 14.8% gains.
The global financial services market is expected to grow at a 6% CAGR over the next five years to hit $28.5 trillion by 2025.
But despite the bullish sentiment toward the industry, highly discussed stocks on Reddit’s wallstreetbets (WSB) chatroom—Rocket Companies, Inc. (RKT) and UWM Holdings Corporation (UWMC)—exhibit bleak growth prospects. Analysts expect their revenue and EPS to decline in the near term. Thus, we think these stocks are best avoided now.