A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. That said, here is one low-volatility stock providing safe-and-steady growth and two that may not deliver the returns you need.
Two Stocks to Sell:
GATX (GATX)
Rolling One-Year Beta: 0.86
Originally founded to ship beer, GATX (NYSE: GATX) provides leasing and management services for railcars and other transportation assets globally.
Why Are We Hesitant About GATX?
- Performance surrounding its active railcars has lagged its peers
- Free cash flow margin shrank by 32.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- 9× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
GATX’s stock price of $153.38 implies a valuation ratio of 17x forward P/E. Check out our free in-depth research report to learn more about why GATX doesn’t pass our bar.
Champion Homes (SKY)
Rolling One-Year Beta: 0.82
Founded in 1951, Champion Homes (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.
Why Are We Cautious About SKY?
- Underwhelming unit sales over the past two years imply it may need to invest in improvements to get back on track
- Earnings per share have dipped by 28.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Champion Homes is trading at $60.37 per share, or 15.3x forward P/E. Read our free research report to see why you should think twice about including SKY in your portfolio.
One Stock to Buy:
PennyMac Financial Services (PFSI)
Rolling One-Year Beta: 0.24
Founded during the 2008 financial crisis to help address the mortgage market meltdown, PennyMac Financial Services (NYSE: PFSI) is a specialty financial services company that originates, services, and manages investments related to residential mortgage loans in the United States.
Why Should You Buy PFSI?
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 57.4% outpaced its revenue gains
- Annual tangible book value per share growth of 20.5% over the last five years was superb and indicates its capital strength increased during this cycle
- Capital strength is on track to rise over the next 12 months as its 20.5% projected tangible book value per share growth implies profitability will accelerate from its two-year trend
At $94.66 per share, PennyMac Financial Services trades at 1.1x forward P/B. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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-micro-cap company Kadant (+351% 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
