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.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here is one volatile stock that could deliver huge gains and two that might not be worth the risk.
Two Stocks to Sell:
The RealReal (REAL)
Rolling One-Year Beta: 2.89
Founded by consignment store aficionado Julie Wainwright, The RealReal (NASDAQ: REAL) is an online marketplace for buying and selling secondhand luxury goods.
Why Are We Hesitant About REAL?
- Struggled with new customer acquisition as its active buyers averaged 7.7% declines
- Negative free cash flow raises questions about the return timeline for its investments
- High net-debt-to-EBITDA ratio of 23× increases the risk of forced asset sales or dilutive financing if operational performance weakens
The RealReal’s stock price of $6.02 implies a valuation ratio of 24.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than REAL.
L.B. Foster (FSTR)
Rolling One-Year Beta: 1.98
Founded with a $2,500 loan, L.B. Foster (NASDAQ: FSTR) is a provider of products and services for the transportation and energy infrastructure sectors, including rail products, construction materials, and coating solutions.
Why Do We Think FSTR Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.5% annually over the last five years
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Underwhelming 4.9% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $19.61 per share, L.B. Foster trades at 4.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including FSTR in your portfolio.
One Stock to Watch:
Upwork (UPWK)
Rolling One-Year Beta: 1.21
Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ: UPWK) is an online platform where businesses and independent professionals connect to get work done.
Why Does UPWK Stand Out?
- Monetization efforts are paying off as its average revenue per customer has grown by 8.4% annually over the last two years
- Additional sales over the last three years increased its profitability as the 168% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin jumped by 21.1 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Upwork is trading at $13.38 per share, or 10.1x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
