5 of the Most Overrated Stocks on Wall Street Right Now

1. Amazon.com, Inc. (AMZN) is a perennial favorite, and downright dangerous to speak against. Its fans are also quick to point out that its shares have gained a whopping 2,215% over the course of the past 10 years.Giving credit where it’s due, Amazon Web Services (or AWS) has been a workhorse for the e-commerce giant. The cloud-computing arm of the company generated $3.5 billion worth of revenue last quarter alone, growing 47% on a year-over-year basis. In fact, a double-digit growth pace has been the norm. Better still, AWS has become a major profit center, generating $926 million worth of operating income last quarter, or roughly three-fourths of the company’s $1.25 billion in operational income.That 47% growth pace for AWS in the fourth quarter, however, is the slowest-ever growth the division has ever seen since Amazon reported it.

2.Twilio Inc. (TWLO) has been another market darling since going public in June of last year. The company, which provides cloud-based telephonic services for business marketing purposes, watched its stock rally from an IPO price of $15 to a high near $71 in September to a low of $26 early this year back to its current price near $32.

The most recent recovery suggests TWLO shares are finally stabilizing. Problem is, the stabilizing price still doesn’t make any sense even under the most optimistic of plausible It’s not the concept of the company’s product, nor is it concern that the company can grow. Twilio pumped up the bottom line from $166.9 million worth of revenue in 2015 to an impressive $277.3 million worth of sales for 2016. Similar growth is expected this year and next year.

The concern is the still-frothy market cap. With a company valuation of $2.8 billion and a price/sales ratio of 10, Twilio needs to be turning around $3 billion worth of revenue into a minimum of $500 million (give or take) worth of income per year just to justify its current valuation and be valued like its peers.

3. Tesla Inc. (TSLA) is another one of those stocks the market loves to love. And why not? The company has indeed mainstreamed the idea of electric vehicles, and not only holds the most market share in the category, but holds the most market share between investors’ ears.Never mind the earnings miss; neither the spending-happy company nor TSLA shareholders have ever been terribly concerned about turning a profit during this early stage of its existence. The concerning red flag that’s started to wave (again) is the company’s constant need for more cash. CEO Elon Musk conceded just a few days ago the company is likely to need yet-another cash injection soon. That means another secondary offering or the issuance of new debt.One has to wonder when, or even if, Tesla will become self-sustaining.

4. National Instruments Corp. (NATI) is hardly a household name. The $4.2 billion company makes software exclusively for engineers and scientists, and testing equipment for hardware. There’s a market for it, to be sure, even if not a big one; National Instruments doesn’t have any real peers. That may be why each of the three analysts covering it deem NATI a “strong buy,” or an equivalent rating.There are limits, though, even when the future looks bright.

Experts collectively expect this year’s bottom line to grow from last year’s 69 cents per share to 93 cents per share, with that outlook rising to $1.19 per share of NATI the following year. What those optimistic analysts haven’t explained yet is exactly how or why the company is going to reach those lofty goals.National Instruments hasn’t grown revenues more than 6% in any of the past three fiscal years.

5.With a dividend yield of 7% that’s paid like clockwork, cigarette company Vector Group Ltd (VGR) seems like a solid play. Throw in the fact Vector manages to find a way to keep growing the top and bottom lines even against a headwind of smoking cessation, and the company is even more impressive.Look under the hood, however, and you might not like what you find.
That dividend Vector Group Ltd is paying? It can’t afford it. It has dished out $1.58 worth of dividends per share for the past four reported quarters, but has only earned 57 cents per share during that time; not in one single quarter has it covered its dividend payment with an actual profit.

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