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 steer clear of and a few better alternatives.
Olaplex (OLPX)
Rolling One-Year Beta: 1.39
Rising to fame on TikTok because of its “bond building" hair products, Olaplex (NASDAQ: OLPX) offers products and treatments that repair the damage caused by traditional heat and chemical-based styling goods.
Why Should You Dump OLPX?
- Sales tumbled by 14.2% annually over the last three years, showing consumer trends are working against its favor
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
- 16.1 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
Olaplex’s stock price of $1.58 implies a valuation ratio of 21.4x forward P/E. Dive into our free research report to see why there are better opportunities than OLPX.
Sabre (SABR)
Rolling One-Year Beta: 2.45
Originally a division of American Airlines, Sabre (NASDAQ: SABR) is a technology provider for the global travel and tourism industry.
Why Do We Avoid SABR?
- Demand for its offerings was relatively low as its number of central reservation system transactions has underwhelmed
- Poor free cash flow margin of -0.9% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Sabre is trading at $3.16 per share, or 17x forward P/E. Read our free research report to see why you should think twice about including SABR in your portfolio.
CTS (CTS)
Rolling One-Year Beta: 1.37
With roots dating back to 1896 and a global manufacturing footprint, CTS (NYSE: CTS) designs and manufactures sensors, connectivity components, and actuators for aerospace, defense, industrial, medical, and transportation markets.
Why Is CTS Not Exciting?
- Annual sales declines of 5.7% for the past two years show its products and services struggled to connect with the market during this cycle
- Smaller revenue base of $520.9 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
At $42 per share, CTS trades at 17.5x forward P/E. Check out our free in-depth research report to learn more about why CTS doesn’t pass our bar.
Stocks We Like More
Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 Exlservice (+354% 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
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