A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren’t prepared.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here is one volatile stock that could deliver huge gains and two best left to the gamblers.
Two Stocks to Sell:
nLIGHT (LASR)
Rolling One-Year Beta: 1.36
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ: LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Should You Sell LASR?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.6% annually over the last two years
- 6.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
nLIGHT is trading at $33.25 per share, or 3,259x forward P/E. Dive into our free research report to see why there are better opportunities than LASR.
Knowles (KN)
Rolling One-Year Beta: 1.76
With roots dating back to 1946 and a focus on components that must perform flawlessly in critical situations, Knowles (NYSE: KN) designs and manufactures specialized electronic components like high-performance capacitors, microphones, and speakers for medical technology, defense, and industrial applications.
Why Do We Avoid KN?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.7% annually over the last five years
- Subscale operations are evident in its revenue base of $573.5 million, meaning it has fewer distribution channels than its larger rivals
- Underwhelming 8.3% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
At $23.49 per share, Knowles trades at 19.5x forward P/E. Read our free research report to see why you should think twice about including KN in your portfolio.
One Stock to Watch:
Acuity Brands (AYI)
Rolling One-Year Beta: 1.27
One of the pioneers of smart lights, Acuity (NYSE: AYI) designs and manufactures light fixtures and building management systems used in various industries.
Why Are We Fans of AYI?
- Superior product capabilities and pricing power are reflected in its stellar gross margin of 44.5%
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- ROIC punches in at 16.6%, illustrating management’s expertise in identifying profitable investments
Acuity Brands’s stock price of $363 implies a valuation ratio of 18.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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 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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