Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.
Match Group (MTCH)
Rolling One-Year Beta: 0.09
Originally started as a dial-up service before widespread internet adoption, Match (NASDAQ: MTCH) was an early innovator in online dating and today has a portfolio of apps including Tinder, Hinge, Archer, and OkCupid.
Why Are We Wary of MTCH?
- Payers have declined by 4.5% annually over the last two years, suggesting it may need to revamp its features or user experience to stay competitive
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
- Free cash flow margin shrank by 2.6 percentage points over the last few years, suggesting the company is consuming more capital to stay competitive
At $29.10 per share, Match Group trades at 6.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than MTCH.
Spectrum Brands (SPB)
Rolling One-Year Beta: 0.74
A leader in multiple consumer product categories, Spectrum Brands (NYSE: SPB) is a diversified company with a portfolio of trusted brands spanning home appliances, garden care, personal care, and pet care.
Why Is SPB Risky?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Cash-burning history makes us doubt the long-term viability of its business model
- Underwhelming 0.6% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up
Spectrum Brands is trading at $59.47 per share, or 11x forward price-to-earnings. Check out our free in-depth research report to learn more about why SPB doesn’t pass our bar.
Target Hospitality (TH)
Rolling One-Year Beta: 0.23
Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ: TH) is a provider of specialty workforce lodging accommodations and services.
Why Do We Think Twice About TH?
- Performance surrounding its utilized beds has lagged its peers
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 7.6% annually
Target Hospitality’s stock price of $6.38 implies a valuation ratio of 8.1x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including TH in your portfolio.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
