A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here are three low-volatility stocks to steer clear of and a few better alternatives.
Clean Harbors (CLH)
Rolling One-Year Beta: 0.95
Established in 1980, Clean Harbors (NYSE: CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.
Why Do We Think Twice About CLH?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Free cash flow margin shrank by 4.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Clean Harbors is trading at $235.54 per share, or 28x forward P/E. Read our free research report to see why you should think twice about including CLH in your portfolio.
Lockheed Martin (LMT)
Rolling One-Year Beta: 0.38
Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.
Why Are We Out on LMT?
- Backlog growth averaged a weak 7.3% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 4.9% annually while its revenue grew
- Waning returns on capital imply its previous profit engines are losing steam
Lockheed Martin’s stock price of $486.65 implies a valuation ratio of 17.2x forward P/E. If you’re considering LMT for your portfolio, see our FREE research report to learn more.
Meritage Homes (MTH)
Rolling One-Year Beta: 0.61
Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE: MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.
Why Do We Steer Clear of MTH?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 36.5% declines over the past two years
- Free cash flow margin dropped by 6.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital imply its previous profit engines are losing steam
At $73 per share, Meritage Homes trades at 8.4x forward P/E. Check out our free in-depth research report to learn more about why MTH doesn’t pass our bar.
Stocks We Like More
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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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 Tecnoglass (+1,754% 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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