Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here are three low-volatility stocks to steer clear of and a few better alternatives.
Waste Management (WM)
Rolling One-Year Beta: 0.22
Headquartered in Houston, Waste Management (NYSE: WM) is a provider of comprehensive waste management services in North America.
Why Are We Wary of WM?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 7.2% over the last two years was below our standards for the industrials sector
- Free cash flow margin shrank by 6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Waste Management’s stock price of $226 implies a valuation ratio of 29.2x forward P/E. Dive into our free research report to see why there are better opportunities than WM.
Mercury Systems (MRCY)
Rolling One-Year Beta: 0.85
Founded in 1981, Mercury Systems (NASDAQ: MRCY) specializes in providing processing subsystems and components for primarily defense applications.
Why Do We Think MRCY Will Underperform?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Issuance of new shares over the last five years caused its earnings per share to fall by 28% annually while its revenue grew
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $51.87 per share, Mercury Systems trades at 72.6x forward P/E. If you’re considering MRCY for your portfolio, see our FREE research report to learn more.
CBIZ (CBZ)
Rolling One-Year Beta: 0.66
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE: CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
Why Are We Hesitant About CBZ?
- Free cash flow margin shrank by 10.2 percentage points over the last five years, suggesting the company stepped up its investments to maintain its competitive edge
- Underwhelming 10% return on capital reflects management’s difficulties in finding profitable growth opportunities
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate
CBIZ is trading at $72.25 per share, or 18.9x forward P/E. Check out our free in-depth research report to learn more about why CBZ doesn’t pass our bar.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. 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 Comfort Systems (+782% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
