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. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.
GoDaddy (GDDY)
Rolling One-Year Beta: 0.76
Known for its memorable Super Bowl commercials that put it on the map, GoDaddy (NYSE: GDDY) is a domain registrar and web services provider that helps entrepreneurs establish an online presence through domain registration, website building, hosting, and e-commerce tools.
Why Should You Dump GDDY?
- Bookings growth averaged a weak 8.1% over the last year, suggesting it may need to tweak its product roadmap or go-to-market strategy
- Estimated sales growth of 6.9% for the next 12 months is soft and implies weaker demand
- Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 64%
At $133.80 per share, GoDaddy trades at 3.7x forward price-to-sales. Check out our free in-depth research report to learn more about why GDDY doesn’t pass our bar.
Torrid (CURV)
Rolling One-Year Beta: 0.89
Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE: CURV) is a plus-size women’s apparel and accessories retailer.
Why Is CURV Risky?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Earnings per share have dipped by 63% annually over the past three years, which is concerning because stock prices follow EPS over the long term
- Low returns on capital reflect management’s struggle to allocate funds effectively
Torrid’s stock price of $1.64 implies a valuation ratio of 28.3x forward P/E. Dive into our free research report to see why there are better opportunities than CURV.
Oxford Industries (OXM)
Rolling One-Year Beta: 0.84
The parent company of Tommy Bahama, Oxford Industries (NYSE: OXM) is a lifestyle fashion conglomerate with brands that embody outdoor happiness.
Why Are We Out on OXM?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.4%
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Oxford Industries is trading at $38.94 per share, or 11.8x forward P/E. To fully understand why you should be careful with OXM, check out our full research report (it’s free for active Edge members).
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