Avoid Carvana and Buy These 2 Stocks Instead

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.

The hot ticker is a mirage for retirement capital. 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. Reddit options desks have already figured it out: r/options chatter in mid-May is dominated by “CVNA PUTS”, and the stock is down 24.94% year to date. The crowd has arrived, and the risk/reward looks stretched.

Redirect 1: Kinder Morgan, the picks-and-shovels AI trade

Kinder Morgan (NYSE:KMI) is the energy midstream operator quietly compounding while the headlines chase used cars. 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.

The stock is up 27.2% year to date while doing none of the things that make CVNA dangerous.

Redirect 2: KeyCorp, the regional bank the market keeps overlooking

KeyCorp (NYSE:KEY) is a quietly compounding regional bank flying under the retail-trader radar. Three reasons it earns a look:

• Net interest margin is expanding, and guidance went up. Q1 2026 EPS of $0.44 beat estimates by 8.03%, NIM expanded 29 basis points year over year to 2.87%, and management raised 2026 net interest income growth to 9% to 10%.
• Capital is coming back to shareholders aggressively. KeyCorp repurchased roughly $400 million of stock in Q1 and plans $1.3 billion or more in buybacks across 2026, on top of a quarterly dividend of $0.205.
• The valuation hasn’t caught up. Shares trade at a trailing P/E of 13 and a forward P/E of 12, with an analyst target price of $24.97. ROTCE crossed 13% with a stated target of 15%+ by year-end 2027.

Long-term wealth gets built on capital efficiency, durable cash flows, and dividend growth. For investors weighing capital efficiency, durable cash flows, and dividend growth, Kinder Morgan and KeyCorp offer a different exposure profile worth researching.