A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren’t prepared.
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 three volatile stocks best left to the gamblers and some better opportunities instead.
Enpro (NPO)
Rolling One-Year Beta: 1.34
Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE: NPO) designs, manufactures, and sells products used for machinery in various industries.
Why Is NPO Not Exciting?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.1% annually over the last five years
- Earnings per share have dipped by 2.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Underwhelming 6.7% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $180.26 per share, Enpro trades at 23.3x forward P/E. Dive into our free research report to see why there are better opportunities than NPO.
TopBuild (BLD)
Rolling One-Year Beta: 0.81
Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE: BLD) is a distributor and installer of insulation and other building products.
Why Are We Wary of BLD?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Sales are projected to tank by 2.3% over the next 12 months as demand evaporates
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 7.7% annually
TopBuild is trading at $297.50 per share, or 14.2x forward P/E. Read our free research report to see why you should think twice about including BLD in your portfolio.
Rivian (RIVN)
Rolling One-Year Beta: 1.18
The manufacturer of Amazon’s delivery trucks, Rivian (NASDAQ: RIVN) designs, manufactures, and sells electric vehicles and commercial delivery vans.
Why Are We Cautious About RIVN?
- Negative 52.8% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Negative free cash flow raises questions about the return timeline for its investments
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Rivian’s stock price of $13.66 implies a valuation ratio of 2.9x forward price-to-sales. If you’re considering RIVN for your portfolio, see our FREE research report to learn more.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.
