Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. Keeping that in mind, here are three volatile stocks to avoid and some better opportunities instead.
Kadant (KAI)
Rolling One-Year Beta: 1.40
Headquartered in Massachusetts, Kadant (NYSE: KAI) is a global supplier of high-value, critical components and engineered systems used in process industries worldwide.
Why Does KAI Worry Us?
- Muted 3.8% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 3.6% annually while its revenue grew
- 3.7 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
At $269.06 per share, Kadant trades at 27.2x forward P/E. Check out our free in-depth research report to learn more about why KAI doesn’t pass our bar.
Ryder (R)
Rolling One-Year Beta: 1.11
As one of the first companies to introduce the idea of leasing trucks, Ryder (NYSE: R) provides rental vehicles to businesses and delivers packages directly to homes or businesses.
Why Are We Out on R?
- Annual sales growth of 3.5% over the last two years lagged behind its industrials peers as its large revenue base made it difficult to generate incremental demand
- Earnings per share have dipped by 4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.8 percentage points
Ryder’s stock price of $170 implies a valuation ratio of 12x forward P/E. If you’re considering R for your portfolio, see our FREE research report to learn more.
IAC (IAC)
Rolling One-Year Beta: 1.40
Originally known as InterActiveCorp and built through Barry Diller's strategic acquisitions since the 1990s, IAC (NASDAQ: IAC) operates a portfolio of category-leading digital businesses including Dotdash Meredith, Angi, and Care.com, focusing on digital publishing, home services, and caregiving platforms.
Why Do We Avoid IAC?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 15% annually over the last two years
- Earnings per share have dipped by 19.6% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- Negative returns on capital show management lost money while trying to expand the business
IAC is trading at $33.23 per share, or 20x forward P/E. To fully understand why you should be careful with IAC, check out our full research report (it’s free for active Edge members).
High-Quality Stocks for All Market Conditions
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.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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-small-cap company Comfort Systems (+782% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
