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 to avoid and some better opportunities instead.
eBay (EBAY)
Rolling One-Year Beta: 0.45
Originally known as the first online auction site, eBay (NASDAQ: EBAY) is one of the world’s largest online marketplaces.
Why Does EBAY Fall Short?
- Increasing competition is redirecting attention to other platforms as it failed to grow its active buyers over the last two years
- Anticipated sales growth of 4.1% for the next year implies demand will be shaky
- Expenses have increased as a percentage of revenue over the last few years as its EBITDA margin fell by 5.7 percentage points
eBay is trading at $68.60 per share, or 9.9x forward EV/EBITDA. Check out our free in-depth research report to learn more about why EBAY doesn’t pass our bar.
Hanesbrands (HBI)
Rolling One-Year Beta: 0.74
A classic American staple founded in 1901, Hanesbrands (NYSE: HBI) is a clothing company known for its array of basic apparel including innerwear and activewear.
Why Do We Think HBI Will Underperform?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 22.5% annually, worse than its revenue
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $4.82 per share, Hanesbrands trades at 8.7x forward P/E. Dive into our free research report to see why there are better opportunities than HBI.
AAR (AIR)
Rolling One-Year Beta: 0.94
The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE: AIR) is a provider of aircraft maintenance services
Why Do We Think Twice About AIR?
- Sales trends were unexciting over the last five years as its 3.9% annual growth was below the typical industrials company
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Low returns on capital reflect management’s struggle to allocate funds effectively
AAR’s stock price of $56.76 implies a valuation ratio of 13.1x forward P/E. If you’re considering AIR for your portfolio, see our FREE research report to learn more.
Stocks That Overcame Trump’s 2018 Tariffs
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
