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.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. Keeping that in mind, here are three volatile stocks to avoid and some better opportunities instead.
Elastic (ESTC)
Rolling One-Year Beta: 1.51
Built on the powerful open-source Elasticsearch technology that powers search functionality for thousands of websites worldwide, Elastic (NYSE: ESTC) provides a search and AI platform that helps organizations find insights from their data, monitor applications, and protect against security threats.
Why Are We Wary of ESTC?
- Products, pricing, or go-to-market strategy may need some adjustments as its 13.9% average billings growth over the last year was weak
- Estimated sales growth of 13.6% for the next 12 months implies demand will slow from its two-year trend
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
At $73.51 per share, Elastic trades at 4.4x forward price-to-sales. Read our free research report to see why you should think twice about including ESTC in your portfolio.
DraftKings (DKNG)
Rolling One-Year Beta: 1.15
Getting its start in daily fantasy sports, DraftKings (NASDAQ: DKNG) is a digital sports entertainment and gaming company.
Why Does DKNG Give Us Pause?
- Number of monthly unique players has disappointed over the past two years, indicating weak demand for its offerings
- Historical operating margin losses point to an inefficient cost structure
- Free cash flow margin is forecasted to shrink by 1.1 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
DraftKings’s stock price of $35.41 implies a valuation ratio of 30.9x forward P/E. To fully understand why you should be careful with DKNG, check out our full research report (it’s free for active Edge members).
Byrna (BYRN)
Rolling One-Year Beta: 2.13
Providing civilians with tools to disable, disarm, and deter would-be assailants, Byrna (NASDAQ: BYRN) is a provider of non-lethal weapons.
Why Does BYRN Fall Short?
- Poor expense management has led to operating margin losses
- Negative free cash flow raises questions about the return timeline for its investments
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Byrna is trading at $17.55 per share, or 20.5x forward EV-to-EBITDA. If you’re considering BYRN for your portfolio, see our FREE research report to learn more.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. 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-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.
