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3 Low-Volatility Stocks We Find Risky

MZTI Cover Image

Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.

Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.

The Marzetti Company (MZTI)

Rolling One-Year Beta: 0.16

Known for its frozen garlic bread and Parkerhouse rolls, The Marzetti Company (NASDAQ: MZTI) sells bread, dressing, and dips to the retail and food service channels.

Why Are We Hesitant About MZTI?

  1. Annual revenue growth of 4.4% over the last three years was below our standards for the consumer staples sector
  2. Smaller revenue base of $1.91 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
  3. Estimated sales growth of 1.6% for the next 12 months implies demand will slow from its three-year trend

At $180.50 per share, The Marzetti Company trades at 25.2x forward P/E. Read our free research report to see why you should think twice about including MZTI in your portfolio.

Crocs (CROX)

Rolling One-Year Beta: 0.49

Founded in 2002, Crocs (NASDAQ: CROX) sells casual footwear and is known for its iconic clog shoe.

Why Does CROX Give Us Pause?

  1. Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
  2. Estimated sales decline of 4.1% for the next 12 months implies a challenging demand environment
  3. Diminishing returns on capital suggest its earlier profit pools are drying up

Crocs’s stock price of $80.55 implies a valuation ratio of 6.3x forward P/E. Check out our free in-depth research report to learn more about why CROX doesn’t pass our bar.

Ruger (RGR)

Rolling One-Year Beta: 0.32

Founded in 1949, Ruger (NYSE: RGR) is an American manufacturer of firearms for the commercial sporting market.

Why Do We Steer Clear of RGR?

  1. Annual sales declines of 3.9% for the past two years show its products and services struggled to connect with the market
  2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 14.6% annually
  3. Eroding returns on capital suggest its historical profit centers are aging

Ruger is trading at $39.22 per share, or 22.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than RGR.

High-Quality Stocks for All Market Conditions

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