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.
These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. Keeping that in mind, here is one volatile stock that could deliver huge gains and two that might not be worth the risk.
Two Stocks to Sell:
Arhaus (ARHS)
Rolling One-Year Beta: 1.67
With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ: ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.
Why Are We Hesitant About ARHS?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Modest revenue base of $1.27 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 5.9 percentage points
Arhaus’s stock price of $8.08 implies a valuation ratio of 15.7x forward price-to-earnings. If you’re considering ARHS for your portfolio, see our FREE research report to learn more.
PacBio (PACB)
Rolling One-Year Beta: 1.69
Pioneering what scientists call "HiFi long-read sequencing," recognized as Nature Methods' method of the year for 2022, Pacific Biosciences (NASDAQ: PACB) develops advanced DNA sequencing systems that enable scientists and researchers to analyze genomes with unprecedented accuracy and completeness.
Why Are We Out on PACB?
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 5.3% annually while its revenue grew
- 161.2 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
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $1.11 per share, PacBio trades at 2.1x forward price-to-sales. Read our free research report to see why you should think twice about including PACB in your portfolio.
One Stock to Buy:
DoorDash (DASH)
Rolling One-Year Beta: 1.09
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NYSE: DASH) operates an on-demand food delivery platform.
Why Is DASH a Good Business?
- Has the opportunity to boost monetization through new features and premium offerings as its orders have grown by 22.1% annually over the last two years
- Excellent EBITDA margin of 16% highlights the efficiency of its business model, and its profits increased over the last few years as it scaled
- Additional sales over the last three years increased its profitability as the 124% annual growth in its earnings per share outpaced its revenue
DoorDash is trading at $188.10 per share, or 30.3x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
