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 to avoid and some better opportunities instead.

Chewy (CHWY)

Rolling One-Year Beta: 1.23

Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.

Why Are We Hesitant About CHWY?

1. Sizable revenue base leads to growth challenges as its 9.3% annual revenue increases over the last three years fell short of other consumer internet companies
2. Estimated sales growth of 5.2% for the next 12 months implies demand will slow from its three-year trend
3. Gross margin of 29% is below its competitors, leaving less money to invest in areas like marketing and R&D

Chewy’s stock price of $41.50 implies a valuation ratio of 23.7x forward EV/EBITDA. To fully understand why you should be careful with CHWY, check out our full research report (it’s free).

Insteel (IIIN)

Rolling One-Year Beta: 1.25

Growing from a small wire manufacturer to one of the largest in the U.S., Insteel (NYSE: IIIN) provides steel wire reinforcing products for concrete.

Why Do We Think IIIN Will Underperform?

1. Annual sales declines of 13.4% for the past two years show its products and services struggled to connect with the market during this cycle
2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
3. Waning returns on capital imply its previous profit engines are losing steam

At $34.70 per share, Insteel trades at 17.7x forward P/E. Check out our free in-depth research report to learn more about why IIIN doesn’t pass our bar.

Citigroup (C)

Rolling One-Year Beta: 1.46

With operations in nearly 160 countries and a history dating back to 1812, Citigroup (NYSE: C) is a global financial services company that provides banking, investment, wealth management, and payment solutions to consumers, corporations, and governments.

Why Does C Fall Short?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual net interest income increases of 5.7% for the last four years
2. Estimated net interest income growth of 2.6% for the next 12 months implies demand will slow from its four-year trend
3. Net interest margin of 2.4% reflects its high servicing and capital costs

Citigroup is trading at $77.90 per share, or 0.7x forward P/B. Read our free research report to see why you should think twice about including C in your portfolio.

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 6 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 Tecnoglass (+1,754% 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