Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are three volatile stocks to steer clear of and a few better alternatives.
onsemi (ON)
Rolling One-Year Beta: 1.52
Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ: ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.
Why Are We Cautious About ON?
- Annual sales declines of 12.5% for the past two years show its products and services struggled to connect with the market during this cycle
- Projected sales decline of 4.7% over the next 12 months indicates demand will continue deteriorating
- Gross margin of 42.5% reflects its high production costs
onsemi’s stock price of $51.25 implies a valuation ratio of 20.2x forward P/E. To fully understand why you should be careful with ON, check out our full research report (it’s free for active Edge members).
SiteOne (SITE)
Rolling One-Year Beta: 1.22
Known for distributing John Deere tractors and LESCO turf care products, SiteOne Landscape Supply (NYSE: SITE) provides landscaping products and services to professionals, including irrigation, lighting, and nursery supplies.
Why Do We Think Twice About SITE?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 4.9% annually while its revenue grew
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $129.73 per share, SiteOne trades at 29.7x forward P/E. Dive into our free research report to see why there are better opportunities than SITE.
Commercial Vehicle Group (CVGI)
Rolling One-Year Beta: 1.42
Formed from a partnership between two distinct companies, CVG (NASDAQ: CVGI) offers various components used in vehicles and systems used in warehouses.
Why Should You Dump CVGI?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.5% annually over the last five years
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Commercial Vehicle Group is trading at $1.50 per share, or 2.3x forward EV-to-EBITDA. If you’re considering CVGI for your portfolio, see our FREE research report to learn more.
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.
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