Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. That said, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Masco (MAS)
Rolling One-Year Beta: 0.92
Headquartered just outside of Detroit, MI, Masco (NYSE: MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.
Why Do We Avoid MAS?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Anticipated sales growth of 2% for the next year implies demand will be shaky
- Eroding returns on capital suggest its historical profit centers are aging
Masco is trading at $66.28 per share, or 15.5x forward P/E. Dive into our free research report to see why there are better opportunities than MAS.
Butterfield Bank (NTB)
Rolling One-Year Beta: 0.58
Founded in 1784 as one of the oldest banks in the Western Hemisphere, Butterfield Bank (NYSE: NTB) provides banking, wealth management, and trust services to individuals and businesses in select offshore financial centers including Bermuda, Cayman Islands, and the Channel Islands.
Why Are We Cautious About NTB?
- Muted 1.6% annual revenue growth over the last two years shows its demand lagged behind its banking peers
- Forecasted net interest income decline of 43.1% for the upcoming 12 months implies demand will fall off a cliff
- Inferior net interest margin of 2.7% means it must compensate for lower profitability through increased loan originations
At $49.95 per share, Butterfield Bank trades at 1.8x forward P/B. Read our free research report to see why you should think twice about including NTB in your portfolio.
Northwest Bancshares (NWBI)
Rolling One-Year Beta: 0.68
Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ: NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.
Why Do We Think NWBI Will Underperform?
- Muted 5.7% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Performance over the past two years shows its incremental sales were less profitable, as its 2.5% annual earnings per share growth trailed its revenue gains
- Capital trends were unexciting over the last five years as its 1% annual tangible book value per share growth was below the typical banking firm
Northwest Bancshares’s stock price of $12.20 implies a valuation ratio of 0.9x forward P/B. If you’re considering NWBI for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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