Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.
Sotera Health Company (SHC)
Rolling One-Year Beta: 0.90
With a critical role in ensuring the safety of millions of patients worldwide, Sotera Health (NASDAQGS:SHC) provides sterilization services, lab testing, and advisory services to ensure medical devices, pharmaceuticals, and food products are safe for use.
Why Are We Cautious About SHC?
- 5.9% annual revenue growth over the last two years was slower than its healthcare peers
- Modest revenue base of $1.11 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.4% for the last five years
At $11.75 per share, Sotera Health Company trades at 15.4x forward P/E. Check out our free in-depth research report to learn more about why SHC doesn’t pass our bar.
Danaher (DHR)
Rolling One-Year Beta: 0.75
Born from a real estate investment trust that transformed into a manufacturing powerhouse, Danaher (NYSE: DHR) is a global science and technology company that provides specialized equipment, software, and services for biotechnology, life sciences, and diagnostics.
Why Are We Wary of DHR?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Inability to adjust its cost structure while its revenue declined over the last two years led to a 4.3 percentage point drop in the company’s adjusted operating margin
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.2 percentage points
Danaher’s stock price of $203.20 implies a valuation ratio of 25.7x forward P/E. To fully understand why you should be careful with DHR, check out our full research report (it’s free).
Kforce (KFRC)
Rolling One-Year Beta: 0.46
With nearly 60 years of matching skilled professionals with the right opportunities, Kforce (NYSE: KFRC) is a professional staffing company that specializes in placing technology and finance experts with businesses on both temporary and permanent bases.
Why Do We Think KFRC Will Underperform?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 9.8% annually over the last two years
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 11.7% annually
- Diminishing returns on capital suggest its earlier profit pools are drying up
Kforce is trading at $43.75 per share, or 17.2x forward P/E. Read our free research report to see why you should think twice about including KFRC in your portfolio.
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 6 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
