Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.
Mister Car Wash (MCW)
Rolling One-Year Beta: 0.76
Formerly known as Hotshine Holdings, Mister Car Wash (NYSE: MCW) offers car washes across the United States through its conveyorized service.
Why Do We Pass on MCW?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $6.75 per share, Mister Car Wash trades at 14.8x forward P/E. To fully understand why you should be careful with MCW, check out our full research report (it’s free).
AMN Healthcare Services (AMN)
Rolling One-Year Beta: 0.36
With a network of thousands of healthcare professionals ranging from nurses to physicians to executives, AMN Healthcare (NYSE: AMN) provides healthcare workforce solutions including temporary staffing, permanent placement, and technology platforms for hospitals and healthcare facilities across the United States.
Why Is AMN Risky?
- Declining travelers on assignment over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
AMN Healthcare Services’s stock price of $20.52 implies a valuation ratio of 16.9x forward P/E. Dive into our free research report to see why there are better opportunities than AMN.
WaFd Bank (WAFD)
Rolling One-Year Beta: 0.69
Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ: WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.
Why Should You Dump WAFD?
- Net interest income trends were unexciting over the last five years as its 7% annual growth was below the typical bank company
- 102.2 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the company’s willingness to accept lower yields to defend its market position
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 18.8% annually, worse than its revenue
WaFd Bank is trading at $30.04 per share, or 0.9x forward P/B. Read our free research report to see why you should think twice about including WAFD in your portfolio.
Stocks We Like More
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