A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren’t prepared.
Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. That said, here are three volatile stocks best left to the gamblers and some better opportunities instead.
Peloton (PTON)
Rolling One-Year Beta: 2.58
Started as a Kickstarter campaign, Peloton (NASDAQ: PTON) is a fitness technology company known for its at-home exercise equipment and interactive online workout classes.
Why Is PTON Risky?
- Sluggish trends in its connected fitness subscribers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Suboptimal cost structure is highlighted by its history of operating losses
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
Peloton is trading at $6.62 per share, or 9.1x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including PTON in your portfolio.
Lovesac (LOVE)
Rolling One-Year Beta: 2.34
Known for its oversized, premium beanbags, Lovesac (NASDAQ: LOVE) is a specialty furniture brand selling modular furniture.
Why Does LOVE Worry Us?
- Sales trends were unexciting over the last two years as its 2.2% annual growth was below the typical consumer discretionary company
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 1.5 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $21.12 per share, Lovesac trades at 45.9x forward price-to-earnings. Check out our free in-depth research report to learn more about why LOVE doesn’t pass our bar.
Elanco (ELAN)
Rolling One-Year Beta: 1.42
Originally established as a division of pharmaceutical giant Eli Lilly before becoming independent in 2018, Elanco Animal Health (NYSE: ELAN) develops and sells medications, vaccines, and other health products for pets and farm animals across more than 90 countries.
Why Is ELAN Not Exciting?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 3.1% annually
- Negative returns on capital show that some of its growth strategies have backfired
Elanco’s stock price of $9.50 implies a valuation ratio of 10.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than ELAN.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
