Carefully analyze the Robinhood 100, and you are sure to find several stocks that are nothing but traps for inexperienced investors. Though the Robinhood 100 certainly has some bright spots, the plain truth of the matter is experienced investors look at the list with skepticism.
It is known far and wide that retail investors are generally bullish and willing to pour their money into unproven stocks and overvalued stocks. This is precisely why the Robinhood 100 is dotted with companies savvy investors avoid.
Let's take a look at five "Strong Sell" Robinhood 100 stocks to bypass as we approach the new year: Carnival Corporation (CCL), Inovio Pharmaceuticals (INO), Sorrento Therapeutics (SRNE), iBio (IBIO), and AMC Entertainment (AMC).
Carnival Corporation (CCL)
The cruise business might be the worst industry to invest in at this moment in time. The virus is coming back, possibly stronger than before, putting the entire cruise industry in jeopardy.
CCL might be one of the more attractive cruise stocks, yet it is clearly unworthy of investor dollars considering the context. Don't buy into the hype as Robinhood traders have. Perform an honest assessment of this stock, and you will find it is too risky for your hard-earned money.
The POWR Ratings show CCL has "F" grades in the Industry Rank, Trade Grade, and Buy & Hold Grade components. Of the eight analysts who have studied CCL, six recommend holding, one advises selling, and only one recommends buying. Travel restrictions across the globe brought about by a second wave of the virus should send CCL even lower.
Inovio Pharmaceuticals (INO)
INO develops human uses for electroporation that transmits controlled electrical pulses to boost the cellular uptake of biopharmaceuticals. INO has terrible POWR Ratings: "F" grades in the Buy & Hold and Trade Grade components, along with a "D" Peer Grade. Furthermore, INO barely cracks the top 200 of Biotech stocks in our database.
Of the eight analysts who have studied INO, five insist it is a hold, only two recommend buying, and one advises selling. INO's coronavirus vaccine has not reached the late-stage study as expected due to oversight from the FDA. There is no reason to buy INO until some positive news emerges about its vaccine or other medical innovations.
Sorrento Therapeutics (SRNE)
Robinhood traders certainly love their biopharmaceutical stocks. The group's passion for biopharmaceutical companies is somewhat ironic as these retail traders are stereotyped as green and unrefined. SRNE is one of the more popular Robinhood stocks. The company develops and sells oncological therapeutics to treat cancer, infectious disease, metabolic disease, and inflammation.
SRNE is a POWR Ratings dud with "F" grades in the Buy & Hold and Trade Grade components. The stock is ranked 204 out of nearly 400 publicly traded companies in the Biotech industry. SRNE spiked earlier this year, yet its coronavirus-related products have not proven worthy of the hype.
Add in the fact that SRNE is overburdened with $220 million of debt with only $24 million of cash on hand, and you have even more reason to avoid the stock.
IBIO is another biopharmaceutical company that works on therapeutic proteins and vaccines. The company's plant-based solutions are certainly intriguing, yet there has not been sufficient evidence to prove these supposed solutions can treat sleep sickness, influenza, HPV, and other diseases.
The POWR Ratings show IBIO has "F" grades in the Buy & Hold and Trade Grade components. IBIO is ranked 229 out of nearly 400 Biotech stocks. IBIO is behind several other companies in the development of a coronavirus vaccine. Do not buy this stock until there are rumblings that its products are genuinely effective.
AMC Entertainment (AMC)
Now that New York state finally reopened its theaters, the movie industry should be back in business across the entirety of the country. However, the grand reopening might soon turn into a grand closing. The second wave of coronavirus is spreading throughout the country. AMC may have to close its doors once again this winter. The question is whether it will be for good.
The POWR Ratings show AMC has "F" grades in the Industry Rank, Trade Grade, and Buy & Hold Grade components. AMC is ranked outside of the top half of Entertainment - Movies/Studios stocks. Of the six analysts who have performed a deep dive into AMC, zero recommend buying, four recommend holding, and two advise selling. Avoid the trap that is AMC until the spring, and reassess the stock at that point.
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CCL shares were trading at $12.90 per share on Thursday afternoon, up $0.60 (+4.88%). Year-to-date, CCL has declined -74.33%, versus a 4.88% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.5 "Strong Sell" Stocks on the Robinhood 100 to Avoid appeared first on StockNews.com