A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.
Thermo Fisher (TMO)
Rolling One-Year Beta: 0.78
With over 14,000 sales personnel and a portfolio spanning more than 2,500 technology manufacturers, Thermo Fisher Scientific (NYSE: TMO) provides scientific equipment, reagents, consumables, software, and laboratory services to pharmaceutical, biotech, academic, and healthcare customers worldwide.
Why Are We Wary of TMO?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 9.2 percentage points
At $580.79 per share, Thermo Fisher trades at 24x forward P/E. Read our free research report to see why you should think twice about including TMO in your portfolio.
Encompass Health (EHC)
Rolling One-Year Beta: 0.64
With a network of 161 specialized facilities across 37 states and Puerto Rico, Encompass Health (NYSE: EHC) operates inpatient rehabilitation hospitals that help patients recover from strokes, hip fractures, and other debilitating conditions.
Why Are We Cautious About EHC?
- Annual revenue growth of 4.7% over the last five years was below our standards for the healthcare sector
- Free cash flow margin shrank by 1.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Encompass Health’s stock price of $107.50 implies a valuation ratio of 19x forward P/E. To fully understand why you should be careful with EHC, check out our full research report (it’s free for active Edge members).
Stellar Bancorp (STEL)
Rolling One-Year Beta: 0.92
Created through strategic mergers to serve the growing Texas business community, Stellar Bancorp (NYSE: STEL) is a Texas bank holding company that provides commercial banking services primarily to small and medium-sized businesses and professionals.
Why Do We Avoid STEL?
- Sales tumbled by 5.8% annually over the last two years, showing market trends are working against its favor during this cycle
- Concessions to defend its market share have ramped up over the last two years as its net interest margin decreased by 36 basis points (100 basis points = 1 percentage point)
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
Stellar Bancorp is trading at $31.18 per share, or 1x forward P/B. If you’re considering STEL 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-micro-cap company Kadant (+351% 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.
