Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. Keeping that in mind, here are two volatile stocks that could deliver huge gains and one that might not be worth the risk.
One Stock to Sell:
Okta (OKTA)
Rolling One-Year Beta: 1.24
Founded during the aftermath of the financial crisis in 2009, Okta (NASDAQ: OKTA) is a cloud-based software-as-a-service platform that helps companies manage identity for their employees and customers.
Why Are We Hesitant About OKTA?
- Estimated sales growth of 9.6% for the next 12 months implies demand will slow from its three-year trend
- Historical operating losses show it had an inefficient cost structure while scaling
- Projected 4.1 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
At $117.30 per share, Okta trades at 7.2x forward price-to-sales. To fully understand why you should be careful with OKTA, check out our full research report (it’s free).
Two Stocks to Watch:
CSW (CSWI)
Rolling One-Year Beta: 1.99
With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ: CSWI) offers special chemicals, coatings, sealants, and lubricants for various industries.
Why Is CSWI a Top Pick?
- Annual revenue growth of 17.8% over the last five years was superb and indicates its market share increased during this cycle
- Additional sales over the last two years increased its profitability as the 21.9% annual growth in its earnings per share outpaced its revenue
- Robust free cash flow margin of 15% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
CSW’s stock price of $312.70 implies a valuation ratio of 33.6x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Hims & Hers Health (HIMS)
Rolling One-Year Beta: 3.23
Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE: HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.
Why Are We Fans of HIMS?
- Average customer growth of 48.6% over the past two years demonstrates success in acquiring new clients that could increase their spending in the future
- Earnings per share grew by 28.6% annually over the last five years, massively outpacing its peers
- Free cash flow margin increased by 23.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Hims & Hers Health is trading at $49.82 per share, or 37.4x forward EV-to-EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
