This online furniture retailer has seen a bump in sales due to COVID-19 related disruptions, and the stock price has soared. Investors in this firm are betting on a growth story that surpasses Amazon’s (NASDAQ:AMZN) even as competition with Amazon and the firms that survived the retail apocalypse only gets tougher. Wayfair (W) is this week’s Danger Zone pick.

Since we put Wayfair in the Danger Zone in March 2015, the stock is up ~817% (including a 228% gain year-to-date) while the S&P 500 is up just 62%. Investors who think that such extraordinary performance in the stock coincides with accelerating revenue growth, progress toward profitability, or growing competitive advantages are wrong. While Wayfair’s stock performance is attractive to many momentum investors, investors with fiduciary responsibilities should consider the deteriorating fundamentals, weak prospects to achieve profitability, and the unrealistic increase in profits implied by the current valuation.

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