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.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.
Edgewell Personal Care (EPC)
Rolling One-Year Beta: 0.51
Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE: EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.
Why Is EPC Risky?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Sales over the last three years were less profitable as its earnings per share fell by 2.6% annually while its revenue was flat
- Free cash flow margin shrank by 4.9 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
Edgewell Personal Care is trading at $19.82 per share, or 6.8x forward P/E. Check out our free in-depth research report to learn more about why EPC doesn’t pass our bar.
Caleres (CAL)
Rolling One-Year Beta: 0.86
The owner of Dr. Scholl's, Caleres (NYSE: CAL) is a footwear company offering a range of styles.
Why Do We Avoid CAL?
- Products and services aren't resonating with the market as its revenue declined by 3.6% annually over the last two years
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Caleres’s stock price of $12.82 implies a valuation ratio of 5.8x forward P/E. Dive into our free research report to see why there are better opportunities than CAL.
Sunrun (RUN)
Rolling One-Year Beta: 0.88
Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ: RUN) provides residential solar electricity, specializing in panel installation and leasing services.
Why Is RUN Not Exciting?
- Sales tumbled by 6.2% annually over the last two years, showing market trends are working against its favor during this cycle
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $19.87 per share, Sunrun trades at 33.3x forward P/E. To fully understand why you should be careful with RUN, check out our full research report (it’s free for active Edge members).
Stocks We Like More
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