Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. That said, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Domino's (DPZ)
Rolling One-Year Beta: 0.65
Founded by two brothers in Michigan, Domino’s (NYSE: DPZ) is a globally recognized pizza chain known for its creative marketing and fast delivery.
Why Do We Think Twice About DPZ?
- 5.3% annual revenue growth over the last six years was slower than its restaurant peers
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 5.9%
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 8.9% annually
Domino's is trading at $446.90 per share, or 24.3x forward P/E. Read our free research report to see why you should think twice about including DPZ in your portfolio.
Pool (POOL)
Rolling One-Year Beta: 0.56
Founded in 1993 and headquartered in Louisiana, Pool (NASDAQ: POOL) is one of the largest wholesale distributors of swimming pool supplies, equipment, and related leisure products.
Why Should You Dump POOL?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Projected 2.4 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $315 per share, Pool trades at 27.1x forward P/E. To fully understand why you should be careful with POOL, check out our full research report (it’s free).
PACCAR (PCAR)
Rolling One-Year Beta: 0.89
Founded more than a century ago, PACCAR (NASDAQ: PCAR) designs and manufactures commercial trucks of various weights and sizes for the commercial trucking industry.
Why Is PCAR Not Exciting?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Forecasted revenue decline of 4.8% for the upcoming 12 months implies demand will fall even further
- Earnings per share have dipped by 9.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term
PACCAR’s stock price of $97.37 implies a valuation ratio of 18.1x forward P/E. Dive into our free research report to see why there are better opportunities than PCAR.
High-Quality Stocks for All Market Conditions
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