Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. Keeping that in mind, here are three volatile stocks to avoid and some better opportunities instead.
Health Catalyst (HCAT)
Rolling One-Year Beta: 1.18
Founded by healthcare professionals Tom Burton and Steve Barlow in 2008, Health Catalyst (NASDAQ: HCAT) provides data and analytics technology to healthcare organizations, enabling them to improve care and lower costs.
Why Are We Out on HCAT?
- Annual revenue growth of 6% over the last three years was well below our standards for the software sector
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Health Catalyst’s stock price of $2.96 implies a valuation ratio of 0.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than HCAT.
ThredUp (TDUP)
Rolling One-Year Beta: 3.62
Founded to revolutionize thrifting, ThredUp (NASDAQ: TDUP) is a leading online fashion resale marketplace offering a wide selection of gently-used clothing and accessories.
Why Do We Steer Clear of TDUP?
- Demand for its offerings was relatively low as its number of orders has underwhelmed
- Poor expense management has led to operating margin losses
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $10.86 per share, ThredUp trades at 100.4x forward EV-to-EBITDA. To fully understand why you should be careful with TDUP, check out our full research report (it’s free).
Stanley Black & Decker (SWK)
Rolling One-Year Beta: 1.22
With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE: SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.
Why Do We Think SWK Will Underperform?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 8.6% annually
- Free cash flow margin shrank by 10.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Stanley Black & Decker is trading at $74.11 per share, or 13x forward P/E. If you’re considering SWK for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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Don’t let fear keep you from great opportunities and take a look at 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).
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