For more than 17 months, investors have enjoyed a historic bounce-back rally in the stock market. Following the quickest decline of at least 30% in the history of the broad-based S&P 500, the index has since rallied more than 100% off of its low.

But just because the market is in rally mode, it doesn't mean every stock deserves its current valuation. The following five ultra-popular stocks are on the radar for all the wrong reasons, and they should be avoided like the plague in September.

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AMC Entertainment

As I stated last month, movie theater chain AMC Entertainment (AMC -1.76%) will be the top stock to avoid until its share price accurately reflects the ghastly performance of its underlying business and its ugly balance sheet.

There pretty much isn't a fundamental factor working in AMC's favor at the moment. Box office ticket sales have consistently been 30% or more below what they were in 2019, and ticket sales had been declining at a fairly steady clip since 2002. CEO Adam Aron has touted AMC's ability to pick up market share during the pandemic, but he overlooks that the actual movie theater pie has been shrinking for two decades.

More specific to the company, it burned through close to $577 million in cash in just the first six months of 2021. It's also sitting on $5.5 billion in corporate debt, along with $420 million in deferred rent, all of which will need to be repaid in cash. AMC's cash balance at the end of June was a hair over $1.8 billion, or roughly $2 billion if you include the company's untapped revolving credit line. No matter how you finagle the numbers, AMC has virtually no chance of repaying its obligations, and its bondholders know it, which is why more than $1 billion in combined 2026/2027 maturity bonds are valued at 60% to 65% of face value.

The icing on the cake here is that a multitude of theses surrounding an AMC short squeeze aren't supported by fact. Put plainly, a company that was never worth more than $3.8 billion when it was profitable and could pay its debt obligations shouldn't be worth $22 billion when it's hemorrhaging cash and can't pay its obligations.

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Generally speaking, penny stocks (companies with a share price below $5) are penny stocks for a reason. In other words, companies sport a low share price because they're not performing well from an operating standpoint. That's the case with veterinary medicine and diagnostics company Zomedica (ZOM -1.40%).

On the surface, there's a lot to like. Pet expenditures in the U.S. haven't declined on a year-over-year basis in more than a quarter of a century, and an estimated $32.3 billion will be spent this year in the U.S. on veterinary care and product sales, according to the American Pet Products Association.  To boot, Zomedica launched its first-ever commercial product in March. Truforma, as it's known, is a point-of-care diagnostics system for cats and dogs.

The problem is that Truforma just isn't selling. While the company blamed its commercial launch challenges on the sale of its distribution partner, it's still an eye-opener that the company has managed only $29,817 in total sales since its March launch. Although sales will undoubtedly grow as management works out the kinks, I have to wonder what investor wants to pay a multiple of almost 40 times estimated sales for 2022.

With no clear pathway to profitability anytime soon, and management diluting the daylights out of its shareholders to raise cash (there are nearly 980 million outstanding shares), Zomedica is an easy avoid in September.

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Robinhood Markets

Another ultra-popular stock that should be draped in yellow caution tape for September is online investing app Robinhood Markets (HOOD 2.54%).

On one hand, Robinhood has seen its user growth blossom since the pandemic began. In the 18-month period between Dec. 31, 2019 and June 30, 2021, the company's funded accounts have grown from about 10 million to 22.5 million. It also now has more than $100 billion in assets under custody. As retail investors have flocked to Robinhood, revenue has soared.

But this doesn't tell the full story. Even though its customer count has risen, Robinhood has rubbed retail investors and U.S. regulators the wrong way. The company had to pare back trading activity earlier this year on heavily shorted meme stocks (companies lauded for their social media buzz, rather than their operating performance) because it lacked the capital to support heightened trading activity. It's drawn ire from regulators over its sale of order flow to hedge funds, as well.

Robinhood's operating model also looks as if it could be easily disrupted. Even though it's best known for attracting retail investors, and the company can generate revenue from certain trading activities, such as options, it generates a good chunk of its revenue from selling order to flow to a small handful of hedge funds and institutional investors. If any of these clients were to stop paying for order flow, or if new regulations altered how order flow was sold, Robinhood could be in big trouble.

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Aurora Cannabis

Let's face the facts: A majority of Canadian marijuana stocks have no business in investors' portfolios. But time and again Aurora Cannabis (ACB) has demonstrated that it's one of the worst of the bunch and should be avoided at all costs.

When Canada legalized recreational weed in October 2018, Aurora looked to be set for success. It eventually held 15 production facilities (many in various stages of development), and anticipated generating a lot of sales via overseas exports. But in the nearly three years since our northerly neighbor waved the green flag on adult-use cannabis, Aurora's international revenue is still minimal, and it's shuttered, sold, or halted construction on more than half of the facilities it once held.

I can only imagine that one of the more consistently irritating aspects of being an Aurora Cannabis shareholder is the constant dilution. With the former and current management team using the company's shares as collateral to make acquisitions and/or keep the lights on, the company's share count has ballooned from a reverse-split-adjusted 1.3 million to around 198 million in under seven years. With the company racking up 232.3 million Canadian dollars ($185.4 million) in operating losses through the first nine months of fiscal 2021, it's unlikely this share-based dilution is anywhere near finished.

Want another reason to avoid Aurora? Over the past two years, the company has written down approximately half the value of its total assets (about CA$2.8 billion). It's simply one of the worst stocks to play the cannabis boom.

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Since this list of companies to avoid began with a meme stock (AMC), perhaps it's only fitting that it end with another one: GameStop (GME -3.52%).

Whereas AMC is a fundamental nightmare in every respect, video game and accessories retailer GameStop does at least have a few things working in its favor. For instance, the company was able to raise enough cash to take care of its debt and undertake what'll likely be a multiyear turnaround focused on digital gaming. Additionally, whereas movie theater industry sales are shrinking, digital gaming is expanding, which offers growth opportunities for GameStop.

The issue, though, is that GameStop is going to take years to turn things around. This is a company that's been built on a brick-and-mortar operating model for more than two decades. As gaming shifts online, GameStop will be forced to close stores at a steady pace to reduce its operating expenses and essentially backpedal its way into the profit column. Though GameStop can be profitable again on a recurring basis, its $15 billion market cap isn't accurately reflective of the challenges that lie ahead.

If given the choice, I'd choose GameStop over AMC over the long run 1,000 times out of 1,000. But I believe there are much smarter places for investors to put their money right now than a gaming retailer whose sales will likely be stagnant for years.