Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.
These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. Keeping that in mind, here are three volatile stocks to avoid and some better opportunities instead.
Starbucks (SBUX)
Rolling One-Year Beta: 1.29
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ: SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Why Are We Wary of SBUX?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Estimated sales growth of 4.4% for the next 12 months implies demand will slow from its six-year trend
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 3.6 percentage points
At $83.36 per share, Starbucks trades at 26.2x forward P/E. Dive into our free research report to see why there are better opportunities than SBUX.
H&E Equipment Services (HEES)
Rolling One-Year Beta: 1.61
Founded after recognizing a growth trend along the Mississippi River and opportunities developing in the earthmoving and construction equipment business, H&E (NASDAQ: HEES) offers machinery for companies to purchase or rent.
Why Is HEES Not Exciting?
- 2.1% annual revenue growth over the last five years was slower than its industrials peers
- Earnings per share have contracted by 16% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
H&E Equipment Services is trading at $90.57 per share, or 6x forward EV-to-EBITDA. To fully understand why you should be careful with HEES, check out our full research report (it’s free).
CRA (CRAI)
Rolling One-Year Beta: 1.07
Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ: CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.
Why Do We Think Twice About CRAI?
- Revenue base of $697.5 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Free cash flow margin shrank by 11 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
CRA’s stock price of $175.76 implies a valuation ratio of 22x forward P/E. If you’re considering CRAI for your portfolio, see our FREE research report to learn more.
Stocks That Overcame Trump’s 2018 Tariffs
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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
