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.

Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. Keeping that in mind, here are three volatile stocks to avoid and some better opportunities instead.

Arrow Electronics (ARW)

Rolling One-Year Beta: 1.16

Founded as a single retail store, Arrow Electronics (NYSE: ARW) provides electronic components and enterprise computing solutions to businesses globally.

Why Do We Steer Clear of ARW?

1. Sales tumbled by 10.8% annually over the last two years, showing market trends are working against its favor during this cycle
2. Sales were less profitable over the last two years as its earnings per share fell by 31% annually, worse than its revenue declines
3. Waning returns on capital imply its previous profit engines are losing steam

At $115.69 per share, Arrow Electronics trades at 9.7x forward P/E. To fully understand why you should be careful with ARW, check out our full research report (it’s free for active Edge members).

Rogers (ROG)

Rolling One-Year Beta: 1.06

With roots dating back to 1832, making it one of America's oldest continuously operating companies, Rogers (NYSE: ROG) designs and manufactures specialized engineered materials and components used in electric vehicles, telecommunications, renewable energy, and other high-performance applications.

Why Do We Think ROG Will Underperform?

1. Sales were flat over the last five years, indicating it’s failed to expand this cycle
2. Earnings per share fell by 15.3% annually over the last five years while its revenue was flat, showing each sale was less profitable
3. 8.7 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

Rogers’s stock price of $82.02 implies a valuation ratio of 38.7x forward P/E. Check out our free in-depth research report to learn more about why ROG doesn’t pass our bar.

Comerica (CMA)

Rolling One-Year Beta: 1.17

Founded in 1849 during the California Gold Rush era, Comerica (NYSE: CMA) is a financial services company that provides commercial banking, retail banking, and wealth management services to businesses and individuals.

Why Does CMA Give Us Pause?

1. 3.2% annual net interest income growth over the last five years was slower than its banking peers
2. Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 26.9% annually, worse than its revenue
3. Products and services are facing profitability challenges during this cycle, as seen in its flat tangible book value per share over the last five years

Comerica is trading at $78.08 per share, or 1.5x forward P/B. If you’re considering CMA for your portfolio, see our FREE research report to learn more.

Stocks We Like More

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