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.

These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. That said, here are three volatile stocks to avoid and some better opportunities instead.

Sprout Social (SPT)

Rolling One-Year Beta: 1.22

Founded by Justyn Howard and Aaron Rankin in 2010, Sprout Social (NASDAQ: SPT) provides a software as a service platform that companies can use to schedule and respond to posts on major social media networks like Twitter, Facebook, Instagram, Youtube and LinkedIn.

Why Are We Wary of SPT?

1. Rapid expansion strategy came at the expense of operating profitability
2. Poor free cash flow margin of 6.1% for the last year limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

At $21.50 per share, Sprout Social trades at 2.7x forward price-to-sales. Read our free research report to see why you should think twice about including SPT in your portfolio.

MRC Global (MRC)

Rolling One-Year Beta: 1.52

Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE: MRC) offers pipes, valves, and fitting products for various industries.

Why Do We Pass on MRC?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 3.3% annually over the last five years
2. Earnings per share have contracted by 41.5% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Underwhelming 2.3% return on capital reflects management’s difficulties in finding profitable growth opportunities

MRC Global is trading at $11.65 per share, or 10.9x forward price-to-earnings. To fully understand why you should be careful with MRC, check out our full research report (it’s free).

Pursuit (PRSU)

Rolling One-Year Beta: 1.17

With attractions ranging from glacier tours in the Canadian Rockies to an oceanfront geothermal lagoon in Iceland, Pursuit Attractions and Hospitality (NYSE: PRSU) operates iconic travel experiences, experiential marketing services, and exhibition management across North America and Europe.

Why Should You Sell PRSU?

1. Products and services aren't resonating with the market as its revenue declined by 2.4% annually over the last five years
2. Sales were less profitable over the last five years as its earnings per share fell by 6.3% annually, worse than its revenue declines
3. Negative returns on capital show that some of its growth strategies have backfired

Pursuit’s stock price of $28.61 implies a valuation ratio of 118.2x forward price-to-earnings. If you’re considering PRSU for your portfolio, see our FREE research report to learn more.

Stocks We Like 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 Strong Momentum Stocks for this week. 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.