Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.

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.

Caterpillar (CAT)

Rolling One-Year Beta: 1.26

With its iconic yellow machinery working on construction sites, Caterpillar (NYSE: CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Why Are We Hesitant About CAT?

1. Annual sales declines of 1.4% for the past two years show its products and services struggled to connect with the market during this cycle
2. 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
3. Earnings per share have contracted by 2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

Caterpillar is trading at $598.13 per share, or 30.4x forward P/E. To fully understand why you should be careful with CAT, check out our full research report (it’s free for active Edge members).

Hyster-Yale Materials Handling (HY)

Rolling One-Year Beta: 1.37

Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE: HY) designs, manufactures, and sells materials handling equipment to various sectors.

Why Should You Sell HY?

1. Sales tumbled by 2% annually over the last two years, showing market trends are working against its favor during this cycle
2. Projected sales decline of 6.4% over the next 12 months indicates demand will continue deteriorating
3. Earnings per share fell by 2.6% annually over the last five years while its revenue grew, partly because it diluted shareholders

Hyster-Yale Materials Handling’s stock price of $33.40 implies a valuation ratio of 10x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why HY doesn’t pass our bar.

WEX (WEX)

Rolling One-Year Beta: 1.36

Originally founded in 1983 as Wright Express to serve the fleet card market, WEX (NYSE: WEX) provides payment processing and business solutions across fleet management, employee benefits, and corporate payments sectors.

Why Does WEX Worry Us?

1. Sales trends were unexciting over the last two years as its 2.4% annual growth was below the typical financials company
2. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 4% annually

At $153.38 per share, WEX trades at 9x forward P/E. Read our free research report to see why you should think twice about including WEX in your portfolio.

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% 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

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