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 are three volatile stocks to avoid and some better opportunities instead.
nLIGHT (LASR)
Rolling One-Year Beta: 1.41
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 Do We Pass on LASR?
- Sales tumbled by 1.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Free cash flow margin shrank by 6.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $30.90 per share, nLIGHT trades at 6x forward price-to-sales. Check out our free in-depth research report to learn more about why LASR doesn’t pass our bar.
Thermon (THR)
Rolling One-Year Beta: 1.34
Creating the first packaged tracing systems, Thermon (NYSE: THR) is a leading provider of engineered industrial process heating solutions for process industries.
Why Does THR Give Us Pause?
- Sales trends were unexciting over the last two years as its 4.3% annual growth was below the typical industrials company
- Estimated sales growth of 3.2% for the next 12 months is soft and implies weaker demand
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 4.3% annually
Thermon is trading at $26.47 per share, or 10.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including THR in your portfolio.
Navient (NAVI)
Rolling One-Year Beta: 1.10
Spun off from Sallie Mae in 2014 to handle the company's loan servicing and collection operations, Navient (NASDAQ: NAVI) provides education loan servicing and business processing solutions that help manage federal student loans, private education loans, and government services.
Why Should You Dump NAVI?
- Annual sales declines of 12.1% for the past five years show its products and services struggled to connect with the market during this cycle
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Elevated debt-to-equity ratio of 18.7× suggests the firm is overleveraged and may struggle to secure additional financing
Navient’s stock price of $13.66 implies a valuation ratio of 12.1x forward P/E. If you’re considering NAVI for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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Don’t let fear keep you from great opportunities and take a look at 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).
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