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 to avoid and some better opportunities instead.

Fiverr (FVRR)

Rolling One-Year Beta: 1.07

Based in Tel Aviv, Fiverr (NYSE: FVRR) operates a fixed price global freelance marketplace for digital services.

Why Does FVRR Worry Us?

1. Value proposition isn’t resonating strongly as its active buyers averaged 8.1% drops over the last two years
2. Estimated sales growth of 7% for the next 12 months implies demand will slow from its three-year trend
3. High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum

Fiverr’s stock price of $23.05 implies a valuation ratio of 9.4x forward EV/EBITDA. To fully understand why you should be careful with FVRR, check out our full research report (it’s free).

Textron (TXT)

Rolling One-Year Beta: 1.26

Listed on the NYSE in 1947, Textron (NYSE: TXT) provides products and services in the aerospace, defense, industrial, and finance sectors.

Why Are We Hesitant About TXT?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.3% over the last five years was below our standards for the industrials sector
2. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
3. 6.9 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

Textron is trading at $81.89 per share, or 12.7x forward P/E. If you’re considering TXT for your portfolio, see our FREE research report to learn more.

Byrna (BYRN)

Rolling One-Year Beta: 1.82

Providing civilians with tools to disable, disarm, and deter would-be assailants, Byrna (NASDAQ: BYRN) is a provider of non-lethal weapons.

Why Are We Wary of BYRN?

1. Suboptimal cost structure is highlighted by its history of operating margin losses
2. Negative free cash flow raises questions about the return timeline for its investments
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

At $20.04 per share, Byrna trades at 46.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than BYRN.

High-Quality Stocks for All Market Conditions

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