A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. That said, here are three low-volatility stocks to avoid and some better opportunities instead.
Altice (ATUS)
Rolling One-Year Beta: 0.63
Based in Long Island City, Altice USA (NYSE: ATUS) is a telecommunications company offering cable, internet, telephone, and television services across the United States.
Why Do We Steer Clear of ATUS?
- Number of broadband subscribers has disappointed over the past two years, indicating weak demand for its offerings
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Altice is trading at $2.82 per share, or 0.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including ATUS in your portfolio.
Hasbro (HAS)
Rolling One-Year Beta: 0.93
Credited with the creation of toys such as Mr. Potato Head and the Rubik’s Cube, Hasbro (NASDAQ: HAS) is a global entertainment company offering a diverse range of toys, games, and multimedia experiences for children and families.
Why Should You Dump HAS?
- Annual sales declines of 3.5% for the past five years show its products and services struggled to connect with the market
- Poor expense management has led to operating margin losses
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Hasbro’s stock price of $77.41 implies a valuation ratio of 18.4x forward P/E. To fully understand why you should be careful with HAS, check out our full research report (it’s free).
Acadia Healthcare (ACHC)
Rolling One-Year Beta: 0.76
With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ: ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.
Why Does ACHC Worry Us?
- Annual revenue growth of 2% over the last five years was below our standards for the healthcare sector
- Disappointing admissions over the past two years imply it may need to invest in improvements to get back on track
- Free cash flow margin dropped by 30 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $22.27 per share, Acadia Healthcare trades at 8.4x forward P/E. Dive into our free research report to see why there are better opportunities than ACHC.
Stocks We Like More
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