Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. That said, here are three low-volatility stocks to avoid and some better opportunities instead.
GATX (GATX)
Rolling One-Year Beta: 0.89
Originally founded to ship beer, GATX (NYSE: GATX) provides leasing and management services for railcars and other transportation assets globally.
Why Are We Wary of GATX?
- Demand for its offerings was relatively low as its number of active railcars has underwhelmed
- Cash-burning history makes us doubt the long-term viability of its business model
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
GATX’s stock price of $160.18 implies a valuation ratio of 17.4x forward P/E. Read our free research report to see why you should think twice about including GATX in your portfolio.
Oaktree Specialty Lending (OCSL)
Rolling One-Year Beta: 0.51
Managed by Oaktree Capital Management, one of the world's premier alternative investment firms, Oaktree Specialty Lending (NASDAQ: OCSL) is a business development company that provides customized financing solutions to mid-market companies across various industries.
Why Should You Dump OCSL?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.9% annually over the last two years
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 1.7% annually over the last five years
Oaktree Specialty Lending is trading at $13.85 per share, or 8.3x forward P/E. If you’re considering OCSL for your portfolio, see our FREE research report to learn more.
Capital Southwest (CSWC)
Rolling One-Year Beta: 0.66
Originally founded in 1961 as a venture capital investor that helped launch Texas Instruments, Capital Southwest (NASDAQ: CSWC) is a business development company that provides debt and equity financing to middle-market companies primarily in the United States.
Why Do We Think Twice About CSWC?
- Performance over the past two years shows its incremental sales were less profitable as its earnings per share were flat
At $22.43 per share, Capital Southwest trades at 9.6x forward P/E. To fully understand why you should be careful with CSWC, check out our full research report (it’s free).
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. 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-micro-cap company Kadant (+351% 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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