4 Overvalued Robinhood Stocks to Avoid in October

The newly public Robinhood Markets, Inc.’s (HOOD) platform — known for pioneering commission-free stock trading with no account minimums — witnessed a big surge in first-time users joining its platform amid the COVID-19 pandemic. Its easy-to-use mobile app and features such as fractional trading have attracted more users to its platform especially Millennials and Generation Z.

However, according to JPMorgan Chase & Co. (JPM) analysts, HOOD’s metrics of active users and app downloads plunged during the third quarter, worse than expected. Several investors were furious when it temporarily halted trading in some of the meme stocks. While stocks traded on the platform are considered the most popular ones, not all of them are good bets now.

Carnival Corporation & plc (CCL), Plug Power Inc. (PLUG), Aurora Cannabis Inc. (ACB), and Zomedica Corp. (ZOM) are some of the most-traded stocks on the HOOD platform. However, they look significantly overvalued at their current price levels. So, it could be wise to avoid them now.

Carnival Corporation & plc (CCL)

Leisure travel company CCL operates across North America, Australia, Europe, and Asia. Its ships visit approximately 700 ports under the Carnival Cruise Line, Princess Cruises, Holland America Line, and P&O Cruises (Australia) brand names, among other brands. It is ranked #23 of the top 100 Robinhood stocks.

On October 6, CCL’s Carnival Cruise Line announced plans for more ship restarts for January and February as it works toward returning to its full-fleet sailing from U.S. homeports in the spring of 2022. However, Carnival Splendor from Sydney, Australia, is canceled through February 7, 2022, and Carnival Spirit from Brisbane, Australia, is canceled through February 20, 2022.

CCL’s adjusted net loss increased 16.9% year-over-year to $1.99 billion for the fiscal third quarter ended August 31, 2021. Also, the company’s available lower berth days (ALBD) in the quarter came in at 3.8 million, representing only 17% of the total fleet capacity.

In terms of forward EV/S, CCL’s 20.81x is 1,355.2% higher than the industry average of 1.43x. Moreover, its forward P/S of 11.27x is also 856.9% higher than the industry average of 1.18x.

Analysts expect CCL’s EPS to remain negative in fiscal 2021. Also, the stock has lost 12.9% over the past six months to close yesterday’s trading session at $24.90.

CCL’s POWR Ratings reflect its poor prospects. It has an overall grade of F, which indicates a Strong Sell. The POWR Ratings assess stocks by 118 different factors, each with its weighting.

Also, the stock has an F grade for Value, Stability, and Quality, and a D grade for Sentiment. Click here to access the additional POWR Ratings for CCL (Momentum and Growth). CCL is ranked #2 of 4 stocks in the F-rated Travel - Cruises industry.

Plug Power Inc. (PLUG)

PLUG provides hydrogen fuel cell turnkey solutions for electric mobility and stationary power markets across North America and Europe. It focuses on proton exchange membrane (PEM) fuel cell and fuel processing technologies. It is ranked #22 on the Robinhood Top 100 list.

The Shareholders Foundation, Inc. announced in May 2021 that a lawsuit is pending for certain investors in PLUG’s shares. It is alleged that the company failed to disclose that it would be unable to file its 2020 annual report timely, among other allegations.

PLUG’s net revenues increased 83.2% year-over-year to $124.56 million for the second quarter ended June 30, 2021. However, its gross loss came in at $40.30 million compared to $15,000 in the year-ago period. Also, its operating loss came in at $89.64 million compared to $26.53 million in the year-ago period, while its loss per share was $0.18 compared to $0.03 in the previous period.

In terms of forward EV/S, PLUG’s 20.55x is 979.6% higher than the industry average of 1.90x. Moreover, its forward P/S of 28.34x is also higher than the industry average of 1.53x.

Analysts expect PLUG’s EPS to remain negative in fiscal 2021 and 2022. Moreover, its EPS is expected to decline at a rate of 40% per annum over the next five years. Over the past nine months, the stock has lost 29.7% to close yesterday’s trading session at $24.60.

PLUG’s POWR Ratings reflect its poor prospects. The stock has an overall F grade, equating to a Strong Sell in our proprietary rating system. In addition, it has an F grade for Value, Sentiment, and Quality, and a D grade for Growth and Stability.

We’ve also rated it for Momentum. Click here to access all the PLUG ratings. PLUG is ranked #91 of 92 stocks in the Industrial - Equipment industry.

Aurora Cannabis Inc. (ACB)

Headquartered in Edmonton, Canada, ACB produces, distributes, and sells cannabis and cannabis derivative products. It also offers patient counseling services along with design and construction services. It is ranked #25 in the Robinhood Top 100 list.

For the fiscal fourth quarter ended June 30, 2021, ACB’s total revenue decreased 19.9% year-over-year to $54.83 million. Its cannabis net revenue also fell 18.8% year-over-year to $54.83 million. In addition, its total assets came in at $2.60 billion, down 6.3% year-over-year.

In terms of forward EV/Sales, ACB’s 6.58x is higher than the industry average of 6.53x. Also, its forward P/CF of 26.05x is 36.5% higher than the industry average of 19.08x.

Analysts expect ACB’s EPS to remain negative in fiscal 2021 and 2022. Over the past nine months, the stock has lost 28.4% to close yesterday’s trading session at $7.35.

ACB’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. In addition, the stock has an F grade for Sentiment, and a D grade for Stability, Value, Momentum, and Quality.

We also have graded ACB for Growth. Click here to access all of ACB’s ratings. ACB is ranked #207 out of 211 stocks in the Medical - Pharmaceuticals industry.

Zomedica Corp. (ZOM)

Veterinary health company ZOM focuses on the unmet needs of clinical veterinarians by developing products for companion animals. The company engages in the development and commercialization of TRUFORMA, a diagnostic biosensor platform. It is ranked #28 on the Robinhood Top 100 list.

ZOM acquired Pulse Veterinary Technologies on October 1, a world leader in electro-hydraulic shock wave technology to treat a wide variety of conditions in veterinary patients. However, this is expected to take a toll on the company’s already weak financials.

ZOM’s gross loss came in at $20,183 for the second quarter ended June 30, 2021. Its total current liabilities came in at $3.40 million for the period ended June 30, 2021, compared to $2.03 million for the period ended December 31, 2020. Moreover, its total liabilities came in at $4.28 million compared to $3.12 million in the year-ago period.

In terms of trailing-12-month EV/S, ZOM’s 7,533.98x is significantly higher than the industry average of 6.87x. Moreover, its trailing-12-month P/S of 13.05Kx is also higher than the industry average of 7.58x.

ZOM’s EPS is expected to remain negative in fiscal 2021. Also, the stock has lost 63.6% over the past six months to close yesterday’s trading session at $0.51.

ZOM’s POWR Ratings reflect its poor prospects. It has an overall grade of F, which indicates a Strong Sell. Also, the stock has an F grade for Stability and Quality and a D grade for Value and Sentiment.

Click here to access the additional POWR Ratings for ZOM (Momentum and Growth). ZOM is ranked last of 211 stocks in the Medical - Pharmaceuticals industry.

CCL shares were trading at $24.85 per share on Thursday afternoon, down $0.05 (-0.20%). Year-to-date, CCL has gained 14.73%, versus a 19.23% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

More...