Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.
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 avoid and some better opportunities instead.
Texas Instruments (TXN)
Rolling One-Year Beta: 1.11
Headquartered in Dallas, Texas since the 1950s, Texas Instruments (NASDAQ: TXN) is the world’s largest producer of analog semiconductors.
Why Are We Hesitant About TXN?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 9.3% annually over the last two years
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 8.4 percentage points
- Free cash flow margin shrank by 32.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $213.77 per share, Texas Instruments trades at 37x forward P/E. To fully understand why you should be careful with TXN, check out our full research report (it’s free).
Foot Locker (FL)
Rolling One-Year Beta: 2.41
Known for store associates whose uniforms resemble those of referees, Foot Locker (NYSE: FL) is a specialty retailer that sells athletic footwear, clothing, and accessories.
Why Are We Out on FL?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Foot Locker is trading at $24.51 per share, or 19x forward P/E. If you’re considering FL for your portfolio, see our FREE research report to learn more.
CoreCivic (CXW)
Rolling One-Year Beta: 1.34
Originally founded in 1983 as the first private prison company in the United States, CoreCivic (NYSE: CXW) operates correctional facilities, detention centers, and residential reentry programs for government agencies across the United States.
Why Do We Pass on CXW?
- Sluggish trends in its average available beds suggest customers aren’t adopting its solutions as quickly as the company hoped
- Earnings per share have dipped by 5.6% annually over the past three years, which is concerning because stock prices follow EPS over the long term
- 10.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
CoreCivic’s stock price of $22.67 implies a valuation ratio of 25.3x forward P/E. Dive into our free research report to see why there are better opportunities than CXW.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. 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
