Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.
Coty (COTY)
Rolling One-Year Beta: 0.83
With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Do We Think COTY Will Underperform?
- Organic sales performance over the past one years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Forecasted revenue decline of 2.3% for the upcoming 12 months implies demand will fall off a cliff
- ROIC of 0.6% reflects management’s challenges in identifying attractive investment opportunities
Coty’s stock price of $4.99 implies a valuation ratio of 9.1x forward P/E. Read our free research report to see why you should think twice about including COTY in your portfolio.
Under Armour (UAA)
Rolling One-Year Beta: 0.93
Founded in 1996 by a former University of Maryland football player, Under Armour (NYSE: UAA) is an apparel brand specializing in sportswear designed to improve athletic performance.
Why Do We Pass on UAA?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Under Armour is trading at $4.94 per share, or 15.8x forward P/E. Dive into our free research report to see why there are better opportunities than UAA.
PennyMac Mortgage Investment Trust (PMT)
Rolling One-Year Beta: 0.31
Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE: PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.
Why Does PMT Fall Short?
- Net interest income trends were unexciting over the last five years as its 3.5% annual growth was below the typical banking firm
- Projected net interest income decline of 145% for the next 12 months points to a tough demand environment ahead
- Annual tangible book value per share declines of 4.8% for the past five years show its capital management struggled during this cycle
At $12.18 per share, PennyMac Mortgage Investment Trust trades at 0.8x forward P/B. If you’re considering PMT for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "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 9 Market-Beating Stocks. 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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