Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.

Luckily for you, StockStory helps you navigate which companies are truly worth holding. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.

Dillard's (DDS)

Rolling One-Year Beta: 0.88

With stores located largely in the Southern and Western US, Dillard’s (NYSE: DDS) is a department store chain that sells clothing, cosmetics, accessories, and home goods.

Why Is DDS Not Exciting?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Estimated sales decline of 2.1% for the next 12 months implies an even more challenging demand environment
3. Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 2.1 percentage points

Dillard's is trading at $396.02 per share, or 9.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why DDS doesn’t pass our bar.

Cracker Barrel (CBRL)

Rolling One-Year Beta: 0.33

Known for its country-themed food and merchandise, Cracker Barrel (NASDAQ: CBRL) is a beloved American restaurant and retail chain that celebrates the warmth and charm of Southern hospitality.

Why Do We Pass on CBRL?

1. Sales trends were unexciting over the last five years as its 2.3% annual growth was below the typical restaurant company
2. Earnings per share fell by 17.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. 5× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Cracker Barrel’s stock price of $58 implies a valuation ratio of 21.3x forward P/E. Dive into our free research report to see why there are better opportunities than CBRL.

Ball (BALL)

Rolling One-Year Beta: 0.43

Started with a $200 loan in 1880, Ball (NYSE: BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.

Why Are We Out on BALL?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of -0.6% for the last five years
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $53.58 per share, Ball trades at 14.8x forward P/E. Read our free research report to see why you should think twice about including BALL in your portfolio.

High-Quality Stocks for All Market Conditions

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