Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. That said, here are three low-volatility stocks to avoid and some better opportunities instead.
Carter's (CRI)
Rolling One-Year Beta: 0.35
Rumored to sell more than 10 products for every child born in the United States, Carter's (NYSE:CRI) is an American designer and marketer of children's apparel.
Why Do We Avoid CRI?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
- Sales are projected to tank by 2.1% over the next 12 months as its demand continues evaporating
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Carter’s stock price of $33.34 implies a valuation ratio of 9.4x forward P/E. Dive into our free research report to see why there are better opportunities than CRI.
Quanex (NX)
Rolling One-Year Beta: 0.46
Starting in the seamless tube industry, Quanex (NYSE:NX) manufactures building products like window, door, kitchen, and bath cabinet components.
Why Does NX Fall Short?
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 4.6 percentage points
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 6.9% annually
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.7 percentage points
At $16.68 per share, Quanex trades at 6.5x forward P/E. Check out our free in-depth research report to learn more about why NX doesn’t pass our bar.
Enovis (ENOV)
Rolling One-Year Beta: 0.88
With a focus on helping patients regain or maintain their natural motion, Enovis (NYSE:ENOV) develops and manufactures medical devices for orthopedic care, from injury prevention and pain management to joint replacement and rehabilitation.
Why Should You Sell ENOV?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 8.7% annually over the last five years
- Push for growth has led to negative returns on capital, signaling value destruction, and its decreasing returns suggest its historical profit centers are aging
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Enovis is trading at $34.60 per share, or 11x forward P/E. To fully understand why you should be careful with ENOV, check out our full research report (it’s free).
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 Growth Stocks for this month. 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.