Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. Keeping that in mind, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Rush Street Interactive (RSI)
Rolling One-Year Beta: 0.92
Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.
Why Are We Wary of RSI?
- Subpar operating margin of 2.6% constrains its ability to invest in process improvements or effectively respond to new competitive threats
Rush Street Interactive’s stock price of $19.30 implies a valuation ratio of 51.3x forward P/E. Check out our free in-depth research report to learn more about why RSI doesn’t pass our bar.
ADT (ADT)
Rolling One-Year Beta: 0.60
Founded in 1874 and headquartered in Boca Raton, Florida, ADT (NYSE: ADT) is a provider of security, automation, and smart home solutions, offering comprehensive services for home and business protection.
Why Are We Hesitant About ADT?
- Performance surrounding its customers has lagged its peers
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.7%
- ROIC of 5.7% reflects management’s challenges in identifying attractive investment opportunities
At $8.77 per share, ADT trades at 10x forward P/E. Read our free research report to see why you should think twice about including ADT in your portfolio.
Corcept (CORT)
Rolling One-Year Beta: 0.25
Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ: CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.
Why Does CORT Fall Short?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 16.9 percentage points
- Earnings per share fell by 2.8% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Corcept is trading at $85.66 per share, or 49.2x forward P/E. To fully understand why you should be careful with CORT, check out our full research report (it’s free).
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