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. Keeping that in mind, here is one volatile stock with massive upside potential and two that could just as easily collapse.
Two Stocks to Sell:
Zeta (ZETA)
Rolling One-Year Beta: 2.42
Co-founded by former Apple CEO John Sculley, Zeta Global (NYSE: ZETA) provides software and data analytics tools that help companies market their products to billions of customers.
Why Are We Cautious About ZETA?
- Net revenue retention rate of 96.9% shows it has a tough time retaining customers
- Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 60.4%
- Historical operating losses show it had an inefficient cost structure while scaling
Zeta is trading at $13.98 per share, or 2.3x forward price-to-sales. Read our free research report to see why you should think twice about including ZETA in your portfolio.
PENN Entertainment (PENN)
Rolling One-Year Beta: 1.49
Established in 1982, PENN Entertainment (NASDAQ: PENN) is a diversified American operator of casinos, sports betting, and entertainment venues.
Why Do We Avoid PENN?
- 1% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 30.4% annually while its revenue grew
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
PENN Entertainment’s stock price of $15.97 implies a valuation ratio of 1.6x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why PENN doesn’t pass our bar.
One Stock to Watch:
Photronics (PLAB)
Rolling One-Year Beta: 1.88
Sporting a global footprint of facilities, Photronics (NASDAQ: PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.
Why Do We Like PLAB?
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Share buybacks propelled its annual earnings per share growth to 31.6%, which outperformed its revenue gains over the last five years
- Free cash flow margin increased by 9.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $21.07 per share, Photronics trades at 9.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 176% over the last five years.
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
