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. That said, here are three volatile stocks best left to the gamblers and some better opportunities instead.

Zillow (ZG)

Rolling One-Year Beta: 1.12

Founded by Expedia co-founders Lloyd Frink and Rich Barton, Zillow (NASDAQ: ZG) is the leading U.S. online real estate marketplace.

Why Do We Avoid ZG?

1. Annual sales declines of 7.6% for the past five years show its products and services struggled to connect with the market
2. Persistent operating margin losses suggest the business manages its expenses poorly
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $75.87 per share, Zillow trades at 40.5x forward P/E. Read our free research report to see why you should think twice about including ZG in your portfolio.

Kontoor Brands (KTB)

Rolling One-Year Beta: 1.05

Founded in 2019 after separating from VF Corporation, Kontoor Brands (NYSE: KTB) is a clothing company known for its high-quality denim products.

Why Are We Wary of KTB?

1. Sales were flat over the last two years, indicating it’s failed to expand its business
2. Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
3. Earnings growth underperformed the sector average over the last five years as its EPS grew by just 9.4% annually

Kontoor Brands is trading at $58.30 per share, or 11.7x forward P/E. Dive into our free research report to see why there are better opportunities than KTB.

Herc (HRI)

Rolling One-Year Beta: 1.67

Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE: HRI) provides equipment rental and related services to a wide range of industries.

Why Does HRI Fall Short?

1. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 3.4% annually
2. Free cash flow margin dropped by 13.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Herc’s stock price of $117.34 implies a valuation ratio of 9.5x forward P/E. Read our free research report to see why you should think twice about including HRI in your portfolio.

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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