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. That said, here are two volatile stocks with massive upside potential and one that could just as easily collapse.

One Stock to Sell:

Caterpillar (CAT)

Rolling One-Year Beta: 1.18

With its iconic yellow machinery working on construction sites, Caterpillar (NYSE: CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Why Are We Hesitant About CAT?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Demand will likely fall over the next 12 months as Wall Street expects flat revenue
3. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 29%

At $360 per share, Caterpillar trades at 18.6x forward P/E. If you’re considering CAT for your portfolio, see our FREE research report to learn more.

Two Stocks to Buy:

Sea (SE)

Rolling One-Year Beta: 1.69

Founded in 2009 and a publicly traded company since 2017, Sea (NYSE: SE) started as a gaming platform and has since expanded to offer a variety of services such as e-commerce, digital payments, and financial services across Southeast Asia.

Why Are We Backing SE?

1. Paying Users are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
2. Grip over its ecosystem is highlighted by its ability to grow engagement while increasing the average revenue per user by 11.7% annually
3. Free cash flow margin expanded by 27.3 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends

Sea’s stock price of $154.03 implies a valuation ratio of 40.9x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Distribution Solutions (DSGR)

Rolling One-Year Beta: 1.20

Founded in 1952, Distribution Solutions (NASDAQ: DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries.

Why Will DSGR Beat the Market?

1. Market share has increased this cycle as its 17.8% annual revenue growth over the last two years was exceptional
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 24.9% over the last two years outstripped its revenue performance
3. Free cash flow margin grew by 3.8 percentage points over the last five years, giving the company more chips to play with

Distribution Solutions is trading at $27.77 per share, or 16x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

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 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

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. Find your next big winner with StockStory today. Find your next big winner with StockStory today.