A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren’t prepared.
Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. That said, here are three volatile stocks best left to the gamblers and some better opportunities instead.
Five9 (FIVN)
Rolling One-Year Beta: 1.76
Taking its name from the "five nines" (99.999%) standard for optimal service reliability in telecommunications, Five9 (NASDAQ: FIVN) provides cloud-based software that enables businesses to run their contact centers with tools for customer service, sales, and marketing across multiple communication channels.
Why Are We Wary of FIVN?
- Products, pricing, or go-to-market strategy may need some adjustments as its 13.6% average billings growth over the last year was weak
- Estimated sales growth of 8.2% for the next 12 months implies demand will slow from its two-year trend
- Gross margin of 55.3% is way below its competitors, leaving less money to invest in areas like marketing and R&D
At $24.11 per share, Five9 trades at 1.8x forward price-to-sales. To fully understand why you should be careful with FIVN, check out our full research report (it’s free for active Edge members).
Chegg (CHGG)
Rolling One-Year Beta: 2.49
Started as a physical textbook rental service, Chegg (NYSE: CHGG) is now a digital platform addressing student pain points by providing study and academic assistance.
Why Are We Out on CHGG?
- Value proposition isn’t resonating strongly as its services subscribers averaged 17.3% drops over the last two years
- EBITDA profits fell over the last few years as its sales dropped and it struggled to adjust its fixed costs
- Sales were less profitable over the last three years as its earnings per share fell by 38.2% annually, worse than its revenue declines
Chegg’s stock price of $1.10 implies a valuation ratio of 1.8x forward EV/EBITDA. Check out our free in-depth research report to learn more about why CHGG doesn’t pass our bar.
Herc (HRI)
Rolling One-Year Beta: 1.78
Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE: HRI) provides equipment rental and related services to a wide range of industries.
Why Do We Think Twice About HRI?
- Earnings per share fell by 15.2% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Free cash flow margin shrank by 9.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Herc is trading at $142.05 per share, or 18.9x forward P/E. Read our free research report to see why you should think twice about including HRI in your portfolio.
Stocks We Like More
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Take advantage of the rebound 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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