Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.

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.

Enphase (ENPH)

Rolling One-Year Beta: 0.54

The first company to successfully commercialize the solar micro-inverter, Enphase (NASDAQ: ENPH) manufactures software-driven home energy products.

Why Is ENPH Risky?

1. Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
2. Earnings per share have dipped by 22.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Free cash flow margin dropped by 9.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Enphase’s stock price of $33.35 implies a valuation ratio of 16x forward P/E. Read our free research report to see why you should think twice about including ENPH in your portfolio.

Acadia Healthcare (ACHC)

Rolling One-Year Beta: 0.73

With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ: ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.

Why Do We Think Twice About ACHC?

1. Weak admissions over the past two years suggest it might have to lower prices to accelerate growth
2. Efficiency has decreased over the last five years as its adjusted operating margin fell by 5.2 percentage points
3. 21.7 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

Acadia Healthcare is trading at $14.41 per share, or 8.3x forward P/E. Check out our free in-depth research report to learn more about why ACHC doesn’t pass our bar.

CNA Financial (CNA)

Rolling One-Year Beta: 0.49

With roots dating back to 1853 and majority ownership by Loews Corporation, CNA Financial (NYSE: CNA) is a commercial property and casualty insurance provider offering coverage for businesses, including professional liability, surety bonds, and specialized risk management services.

Why Should You Dump CNA?

1. Scale presents growth limitations compared to smaller competitors, evidenced by its below-average 7.3% annualized growth in net premiums earned for the last five years
2. Earnings per share lagged its peers over the last two years as they only grew by 6.8% annually
3. Policy losses and capital returns have eroded its book value per share this cycle as its book value per share declined by 1.1% annually over the last five years

At $47.44 per share, CNA Financial trades at 10x forward P/E. Dive into our free research report to see why there are better opportunities than CNA.

High-Quality Stocks for All Market Conditions

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