Even though the stock market has solid, forward momentum, and most stocks are hovering near record highs, we think ultra-popular and hype-driven gainers NIO Inc. (NIO) and AMC Entertainment (NYSE:) are susceptible to a sharp downturn due to their weak financials and bleak growth prospects. So, these two stocks are best avoided now.With all three benchmark indexes hovering near record highs, the investment environment is certainly favorable for investors. However, not all stocks that contributed to the market’s momentum are good bets now.
The exceptional rally of some stocks has been driven by their popularity with social-media-influenced retail traders, in some cases despite their companies’ weak financials and bleak growth prospects.
Chinese EV-maker NIO Inc. (NIO) and American movie theater chain AMC Entertainment Holding, Inc. (AMC) have witnessed a skyrocketing rally based solely on their popularity and social media hype. But, since their current price levels are not in sync with their fundamentals, they could witness a price retreat in the near term. Therefore, we think these two stocks are best avoided now.
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