Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. Keeping that in mind, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Snap-on (SNA)
Rolling One-Year Beta: 0.79
Founded in 1920, Snap-on (NYSE: SNA) is a global provider of tools, equipment, and diagnostics for various industries such as vehicle repair, aerospace, and the military.
Why Do We Think Twice About SNA?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- 6.3 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $322.12 per share, Snap-on trades at 16.1x forward P/E. To fully understand why you should be careful with SNA, check out our full research report (it’s free).
Encompass Health (EHC)
Rolling One-Year Beta: 0.61
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 Is EHC Not Exciting?
- Expenses have increased as a percentage of revenue over the last two years as its adjusted operating margin fell by 4 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.2 percentage points
Encompass Health’s stock price of $119.01 implies a valuation ratio of 24.4x forward P/E. If you’re considering EHC for your portfolio, see our FREE research report to learn more.
Gartner (IT)
Rolling One-Year Beta: 0.91
With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE: IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.
Why Are We Hesitant About IT?
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 9.3% annually
Gartner is trading at $442.91 per share, or 35.7x forward P/E. Check out our free in-depth research report to learn more about why IT doesn’t pass our bar.
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 Growth Stocks for this month. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
