Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. That said, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
G-III (GIII)
Rolling One-Year Beta: -0.06
Founded as a small leather goods business, G-III (NASDAQ: GIII) is a fashion and apparel conglomerate with a diverse portfolio of brands.
Why Do We Steer Clear of GIII?
- Flat sales over the last two years suggest it must innovate and find new ways to grow
- Projected sales decline of 2.4% for the next 12 months points to an even tougher demand environment ahead
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $27.33 per share, G-III trades at 6.8x forward P/E. Read our free research report to see why you should think twice about including GIII in your portfolio.
Trex (TREX)
Rolling One-Year Beta: 0.95
Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE: TREX) makes wood-alternative decking, railing, and patio furniture.
Why Does TREX Fall Short?
- Muted 5.4% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Free cash flow margin dropped by 3.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Eroding returns on capital suggest its historical profit centers are aging
Trex’s stock price of $57.18 implies a valuation ratio of 25.8x forward P/E. Dive into our free research report to see why there are better opportunities than TREX.
Exact Sciences (EXAS)
Rolling One-Year Beta: 0.35
With a mission to detect cancer earlier when it's more treatable, Exact Sciences (NASDAQ: EXAS) develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test.
Why Does EXAS Give Us Pause?
- Negative free cash flow raises questions about the return timeline for its investments
- Negative returns on capital show that some of its growth strategies have backfired
- High net-debt-to-EBITDA ratio of 11× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Exact Sciences is trading at $56.05 per share, or 85.8x forward P/E. Check out our free in-depth research report to learn more about why EXAS doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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 Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
