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.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here is one volatile stock that could reward patient investors and two that might not be worth the risk.
Two Stocks to Sell:
Dover (DOV)
Rolling One-Year Beta: 1.21
A company that manufactured critical equipment for the United States military during World War II, Dover (NYSE: DOV) manufactures engineered components and specialized equipment for numerous industries.
Why Are We Out on DOV?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 3.2% annually
- Waning returns on capital imply its previous profit engines are losing steam
Dover’s stock price of $166.64 implies a valuation ratio of 17x forward P/E. Read our free research report to see why you should think twice about including DOV in your portfolio.
Guardant Health (GH)
Rolling One-Year Beta: 1.30
Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ: GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.
Why Are We Cautious About GH?
- Earnings per share fell by 19.6% annually over the last five years while its revenue grew, partly because it diluted shareholders
- Cash-burning history makes us doubt the long-term viability of its business model
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Guardant Health is trading at $63.01 per share, or 7.7x forward price-to-sales. If you’re considering GH for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Vita Coco (COCO)
Rolling One-Year Beta: 1.12
Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ: COCO) offers coconut water products that are a natural way to quench thirst.
Why Is COCO on Our Radar?
- Average unit sales growth of 7.8% over the past two years reflects steady demand for its products
- Earnings per share grew by 195% annually over the last three years, massively outpacing its peers
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are growing as it capitalizes on even better market opportunities
At $42.42 per share, Vita Coco trades at 33.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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