Avoid Carvana and Buy These 2 Stocks Instead

"Carvana trades at a forward P/E of 55 and a price-to-book of 15, with a beta of 3.55. That eye-catching Q4 net income of $951 million was flattered by a $618 million non-cash tax benefit, and the prior quarter actually missed estimates by 21.97% after a $120 million Root warrant swing. Layer on $4.83 billion in long-term debt plus a $2.23 billion tax receivable agreement liability, a cyclical used-car backdrop, and CEO Ernie Garcia's own 3-million-unit target stretching to 2030 to 2035."

"The hot ticker is a mirage for retirement capital. Carvana ( NYSE:CVNA | CVNA Price Prediction) is back in every retail-trader feed after a 287.16% Q4 EPS beat and its 2025 inclusion in the S&P 500 turned the online used-car retailer into the momentum story of the cycle. The setup, though, has cracks worth quantifying."

"Three reasons it merits a closer look for income-focused portfolios: A backlog tied to the real AI build-out. The project backlog hit $10 billion at year-end, with approximately 90% in natural gas and nearly 60% supporting power generation. CEO Kim Dang noted Kinder Morgan is positioned to serve approximately 70% of future data center power demand markets."

"A balance sheet getting stronger, not weaker. Net debt-to-Adjusted EBITDA sits at 3.8x, and S&P upgraded the senior unsecured rating to BBB+ in January 2026. A dividend that keeps creeping higher. 2026 guidance calls for Adjusted EPS of $1.36 and a dividend of $1.19 per share, with the most recent quarterly payout already raised to $0.2975."

Carvana has reappeared in retail trading due to a large Q4 EPS beat and S&P 500 inclusion, but the fundamentals show weaknesses. The stock trades at a forward P/E of 55 and a price-to-book of 15, with high volatility reflected in a beta of 3.55. Reported Q4 net income of $951 million was boosted by a $618 million non-cash tax benefit, and the prior quarter missed estimates by 21.97% after a $120 million Root warrant swing. Long-term debt totals $4.83 billion, with a $2.23 billion tax receivable agreement liability, and the used-car market is cyclical. Kinder Morgan is presented as a steadier income-oriented alternative, supported by a $10 billion backlog tied largely to natural gas and power generation, a net debt-to-Adjusted EBITDA of 3.8x, an upgraded BBB+ rating, and a dividend rising toward $0.2975 per quarter and $1.19 per share in 2026 guidance.

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