Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.

At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are three volatile stocks to steer clear of and a few better alternatives.

Bandwidth (BAND)

Rolling One-Year Beta: 1.17

Started in 1999 by David Morken who was later joined by Henry Kaestner as co-founder in 2001, Bandwidth (NASDAQ: BAND) provides thousands of customers with a software platform that uses its own global network to provide phone numbers, voice, and text connectivity.

Why Do We Think BAND Will Underperform?

1. Revenue increased by 13.9% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
2. Estimated sales growth of 2.8% for the next 12 months implies demand will slow from its three-year trend
3. Sky-high servicing costs result in an inferior gross margin of 38% that must be offset through increased usage

At $15.92 per share, Bandwidth trades at 0.6x forward price-to-sales. Read our free research report to see why you should think twice about including BAND in your portfolio.

Academy Sports (ASO)

Rolling One-Year Beta: 1.34

Founded in 1938 as a tire shop before expanding into fishing equipment, Academy Sports & Outdoor (NASDAQ: ASO) sells a broad selection of sporting goods but is still known for its outdoor activity merchandise.

Why Does ASO Worry Us?

1. Annual revenue growth of 3.8% over the last six years was below our standards for the consumer retail sector
2. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
3. Free cash flow margin dropped by 3.4 percentage points over the last year, implying the company became more capital intensive as competition picked up

Academy Sports is trading at $44 per share, or 7.4x forward P/E. Dive into our free research report to see why there are better opportunities than ASO.

Woodward (WWD)

Rolling One-Year Beta: 1.30

Initially designing controls for water wheels in the early 1900s, Woodward (NASDAQ: WWD) designs, services, and manufactures energy control products and optimization solutions.

Why Are We Hesitant About WWD?

1. 2.8% annual revenue growth over the last five years was slower than its industrials peers
2. Earnings per share lagged its peers over the last five years as they only grew by 3.1% annually
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 12.9 percentage points

Woodward’s stock price of $245 implies a valuation ratio of 37x forward P/E. To fully understand why you should be careful with WWD, check out our full research report (it’s free).

Stocks We Like 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 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-small-cap company Comfort Systems (+782% 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