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.
Sweetgreen (SG)
Rolling One-Year Beta: 1.60
Founded in 2007 by three Georgetown University alum, Sweetgreen (NYSE: SG) is a casual quick service chain known for its healthy salads and bowls.
Why Does SG Give Us Pause?
- Historical operating margin losses point to an inefficient cost structure
- Cash-burning history makes us doubt the long-term viability of its business model
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Sweetgreen’s stock price of $12.25 implies a valuation ratio of 35.8x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SG doesn’t pass our bar.
Red Robin (RRGB)
Rolling One-Year Beta: 1.48
Known for its bottomless steak fries, Red Robin (NASDAQ: RRGB) is a chain of casual restaurants specializing in burgers and general American fare.
Why Do We Steer Clear of RRGB?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Earnings per share fell by 25.5% annually over the last six years while its revenue was flat, showing each sale was less profitable
- 10× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Red Robin is trading at $5.09 per share, or 1.5x forward EV-to-EBITDA. To fully understand why you should be careful with RRGB, check out our full research report (it’s free).
Wells Fargo (WFC)
Rolling One-Year Beta: 1.18
Founded during the California Gold Rush in 1852 to provide banking and express delivery services to miners and merchants, Wells Fargo (NYSE: WFC) is a diversified financial services company that provides banking, lending, investment, and wealth management services to individuals and businesses.
Why Are We Wary of WFC?
- Large revenue base makes it harder to expand quickly, and its annual net interest income growth of 5.8% over the last four years was below our standards for the bank sector
- Net interest margin of 2.8% is well below other banks, signaling its loans aren’t very profitable
- High interest payments compared to its earnings raise concerns about its ability to service its debt consistently
At $74.74 per share, Wells Fargo trades at 1.4x forward P/B. Dive into our free research report to see why there are better opportunities than WFC.
High-Quality Stocks for All Market Conditions
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 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
