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 steer clear of and a few better alternatives.
Unity (U)
Rolling One-Year Beta: 2.30
Powering over half of the world's mobile games and expanding into industries from automotive to architecture, Unity (NYSE: U) provides software tools and services that allow developers to create, run, and monetize interactive 2D and 3D content across multiple platforms.
Why Are We Wary of U?
- Products, pricing, or go-to-market strategy need some adjustments as its billings have averaged 6% declines over the last year
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Historical operating margin losses point to an inefficient cost structure
Unity’s stock price of $43.44 implies a valuation ratio of 9.6x forward price-to-sales. If you’re considering U for your portfolio, see our FREE research report to learn more.
Offerpad (OPAD)
Rolling One-Year Beta: 1.45
Known for giving homeowners cash offers within 24 hours, Offerpad (NYSE: OPAD) operates a tech-enabled platform specializing in direct home buying and selling solutions.
Why Do We Steer Clear of OPAD?
- Sluggish trends in its homes purchased suggest customers aren’t adopting its solutions as quickly as the company hoped
- Cash-burning history makes us doubt the long-term viability of its business model
- EBITDA losses may force it to accept punitive lending terms or high-cost debt
At $4.81 per share, Offerpad trades at 0.2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than OPAD.
ESAB (ESAB)
Rolling One-Year Beta: 1.22
Having played a significant role in the construction of the iconic Sydney Opera House, ESAB (NYSE: ESAB) manufactures and sells welding and cutting equipment for numerous industries.
Why Is ESAB Risky?
- 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
- Earnings growth underperformed the sector average over the last four years as its EPS grew by just 3.6% annually
- Free cash flow margin dropped by 4.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
ESAB is trading at $113.08 per share, or 19.5x forward P/E. If you’re considering ESAB for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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