A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.
Yum China (YUMC)
Rolling One-Year Beta: 0.57
One of China’s largest restaurant companies, Yum China (NYSE: YUMC) is an independent entity spun off from Yum! Brands in 2016.
Why Does YUMC Worry Us?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Projected sales growth of 4.8% for the next 12 months suggests sluggish demand
- Challenging supply chain dynamics and bad unit economics are reflected in its low gross margin of 20.1%
Yum China is trading at $43.95 per share, or 16.1x forward P/E. To fully understand why you should be careful with YUMC, check out our full research report (it’s free).
Amneal (AMRX)
Rolling One-Year Beta: 0.68
Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ: AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.
Why Are We Cautious About AMRX?
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $10 per share, Amneal trades at 14.2x forward P/E. Dive into our free research report to see why there are better opportunities than AMRX.
Intercontinental Exchange (ICE)
Rolling One-Year Beta: 0.56
Starting as an energy trading platform in 2000 before acquiring the iconic New York Stock Exchange in 2013, Intercontinental Exchange (NYSE: ICE) operates global financial exchanges, clearing houses, and provides data services and mortgage technology solutions to financial institutions and corporations.
Why Do We Think Twice About ICE?
- Incremental sales over the last five years were less profitable as its 8.6% annual earnings per share growth lagged its revenue gains
Intercontinental Exchange’s stock price of $175.99 implies a valuation ratio of 23.9x forward P/E. If you’re considering ICE for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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