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 are three low-volatility stocks to steer clear of and a few better alternatives.
eXp World (EXPI)
Rolling One-Year Beta: 0.80
Founded in 2009, eXp World (NASDAQ: EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.
Why Do We Steer Clear of EXPI?
- Number of transactions has disappointed over the past two years, indicating weak demand for its offerings
- Poor expense management has led to an operating margin of -0.3% that is below the industry average
- Earnings per share fell by 49.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
At $9.30 per share, eXp World trades at 22x forward P/E. If you’re considering EXPI for your portfolio, see our FREE research report to learn more.
Planet Fitness (PLNT)
Rolling One-Year Beta: 0.69
Founded by two brothers who purchased a struggling gym, Planet Fitness (NYSE: PLNT) is a gym franchise that caters to casual fitness users by providing a friendly and inclusive atmosphere.
Why Does PLNT Give Us Pause?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
- Free cash flow margin is forecasted to shrink by 5.5 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Underwhelming 13.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up
Planet Fitness’s stock price of $106.33 implies a valuation ratio of 35.2x forward P/E. To fully understand why you should be careful with PLNT, check out our full research report (it’s free).
Rush Enterprises (RUSHA)
Rolling One-Year Beta: 0.83
Headquartered in Texas, Rush Enterprises (NASDAQ: RUSH.A) provides truck-related services and solutions, including sales, leasing, parts, and maintenance for commercial vehicles.
Why Should You Dump RUSHA?
- Annual revenue growth of 2.2% over the last two years was below our standards for the industrials sector
- Sales are projected to tank by 1.5% over the next 12 months as demand evaporates
- Earnings per share have contracted by 10% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Rush Enterprises is trading at $53.03 per share, or 8.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than RUSHA.
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 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-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
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