Carvana Co.

New York Stock Exchange
Back to all articles
Bullish +65

Avoid Carvana and Buy These 2 Stocks Instead - 24/7 Wall St.

📉 Carvana trades at a high valuation with a forward P/E of 55 and price-to-book of 15 despite a Q4 EPS beat.

💰 Carvana's reported $951 million net income was inflated by a $618 million non-cash tax benefit.

🏦 Carvana carries significant leverage with $4.83 billion in long-term debt and a $2.23 billion liability.

📉 CVNA stock has declined 24.94% year-to-date amid increased retail trader bearishness.

⚡ Kinder Morgan (KMI) boasts a strong balance sheet with net debt-to-Adjusted EBITDA of 3.8x.

🔋 Kinder Morgan is positioned to serve approximately 70% of future data center power demand markets.

💸 Kinder Morgan received an S&P upgrade to BBB+ in January 2026.

📈 Kinder Morgan stock is up 27.2% year-to-date while maintaining a growing dividend.

🏛 KeyCorp (KEY) reported Q1 2026 EPS of $0.44, beating estimates by 8.03%.

📊 KeyCorp expanded its net interest margin by 29 basis points year-over-year to 2.87%.

💹 KeyCorp plans over $1.3 billion in stock buybacks for 2026.

🎯 KeyCorp raised its 2026 net interest income growth guidance to 9-10%.

Bullish Signals
  • Kinder Morgan has a robust backlog of $10 billion at year-end, with nearly 60% supporting power generation for the AI sector.
  • S&P upgraded Kinder Morgan's senior unsecured rating to BBB+ in January 2026, signaling improved creditworthiness.
  • Kinder Morgan is up 27.2% year-to-date while maintaining a history of increasing dividends.
  • KeyCorp beat Q1 2026 EPS estimates by 8.03%, demonstrating strong operational performance.
  • KeyCorp expanded its net interest margin by 29 basis points to 2.87%, indicating pricing power and efficiency.
  • KeyCorp management raised its 2026 net interest income growth guidance to a range of 9% to 10%.
  • KeyCorp is aggressively returning capital with $400 million in Q1 buybacks and a plan for over $1.3 billion in 2026.
  • KeyCorp trades at an attractive forward P/E of 12 compared to Carvana's high multiple.
Risk Factors
  • Carvana's reported net income was flattered by a $618 million non-cash tax benefit, obscuring underlying cash flow quality.
  • Carvana carries $4.83 billion in long-term debt and a $2.23 billion tax receivable agreement liability.
  • Carvana faces a cyclical downturn in the used-car market which could impact future revenue growth.
  • Carvana's ambitious target of 3 million units by 2035 may stretch operational capabilities given current headwinds.
  • Carvana stock has dropped 24.94% year-to-date, reflecting significant investor concern and risk.
Full Analysis
Carvana (CVNA) is highlighted as a high-risk investment despite recent momentum driven by a massive Q4 earnings beat and inclusion in the S&P 500. The article warns that the stock's valuation appears stretched with a forward P/E of 55 and a price-to-book ratio of 15, noting that reported net income was significantly boosted by a $618 million non-cash tax benefit. The analysis points to substantial financial liabilities including $4.83 billion in long-term debt and a $2.23 billion tax receivable agreement liability. Furthermore, the company faces a challenging used-car market backdrop and aggressive growth targets of 3 million units by 2035, which have led to a 24.94% year-to-date stock decline and increased bearish sentiment among retail traders. As an alternative, the article recommends Kinder Morgan (KMI) for its strong balance sheet with a net debt-to-EBITDA of 3.8x and a recent S&P upgrade to BBB+. Kinder Morgan is positioned to capture demand from the AI build-out, serving approximately 70% of future data center power markets, while maintaining a growing dividend and a stock price up 27.2% year-to-date. KeyCorp (KEY) is presented as another undervalued regional bank opportunity with expanding net interest margins and strong capital return programs. The bank reported Q1 2026 EPS of $0.44, beat estimates by 8.03%, and raised its net interest income growth guidance to 9-10%. Trading at a forward P/E of 12, KeyCorp plans over $1.3 billion in buybacks for 2026 alongside a quarterly dividend of $0.205.