Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Lithia (LAD)
Rolling One-Year Beta: 0.81
With a strong presence in the Western US, Lithia Motors (NYSE: LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers.
Why Does LAD Fall Short?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Gross margin of 15.9% is below its competitors, leaving less money for marketing and promotions
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Lithia’s stock price of $323.58 implies a valuation ratio of 9.2x forward P/E. Read our free research report to see why you should think twice about including LAD in your portfolio.
Choice Hotels (CHH)
Rolling One-Year Beta: 0.58
With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE: CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion.
Why Is CHH Risky?
- Revenue per room has underperformed over the past two years, suggesting it may need to develop new facilities
- Projected sales are flat for the next 12 months, implying demand will slow from its two-year trend
- Eroding returns on capital suggest its historical profit centers are aging
At $130.69 per share, Choice Hotels trades at 18.6x forward P/E. Dive into our free research report to see why there are better opportunities than CHH.
Integer Holdings (ITGR)
Rolling One-Year Beta: 0.69
With its name reflecting the mathematical term for "whole" or "complete," Integer Holdings (NYSE: ITGR) is a medical device outsource manufacturer that produces components and systems for cardiac, vascular, neurological, and other medical applications.
Why Are We Wary of ITGR?
- Sales trends were unexciting over the last five years as its 6.5% annual growth was below the typical healthcare company
- Smaller revenue base of $1.75 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Free cash flow margin shrank by 7.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Integer Holdings is trading at $120.99 per share, or 19.2x forward P/E. To fully understand why you should be careful with ITGR, check out our full research report (it’s free).
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 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
