Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
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 that could offer consistent gains and two that may not keep up.
Two Stocks to Sell:
CarMax (KMX)
Rolling One-Year Beta: 0.52
Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE: KMX) is the largest automotive retailer in the United States.
Why Should You Dump KMX?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Gross margin of 10.8% is below its competitors, leaving less money for marketing and promotions
- 16× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
CarMax’s stock price of $66.80 implies a valuation ratio of 17x forward P/E. To fully understand why you should be careful with KMX, check out our full research report (it’s free).
Lumen (LUMN)
Rolling One-Year Beta: 0.64
With approximately 350,000 route miles of fiber optic cable spanning North America and the Asia Pacific, Lumen Technologies (NYSE: LUMN) operates a vast fiber optic network that provides communications, cloud connectivity, security, and IT solutions to businesses and consumers.
Why Do We Steer Clear of LUMN?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 9.4% annually over the last five years
- Free cash flow margin shrank by 7.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Lumen is trading at $4.33 per share, or 1.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including LUMN in your portfolio.
One Stock to Buy:
BellRing Brands (BRBR)
Rolling One-Year Beta: 0.79
Spun out of Post Holdings in 2019, Bellring Brands (NYSE: BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.
Why Do We Love BRBR?
- Unit sales were phenomenal over the past two years, showing demand is robust and retailers can’t stock enough of its products
- Earnings per share grew by 28% annually over the last three years, massively outpacing its peers
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $57.26 per share, BellRing Brands trades at 24x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 Growth Stocks for this month. 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
