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.
Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. That said, here are three volatile stocks to avoid and some better opportunities instead.
Owens Corning (OC)
Rolling One-Year Beta: 1.33
Credited with the discovery of fiberglass, Owens Corning (NYSE: OC) supplies building and construction materials to the United States and international markets.
Why Does OC Give Us Pause?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- 7.6 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
- Eroding returns on capital suggest its historical profit centers are aging
Owens Corning’s stock price of $145.58 implies a valuation ratio of 10.5x forward P/E. Check out our free in-depth research report to learn more about why OC doesn’t pass our bar.
Woodward (WWD)
Rolling One-Year Beta: 1.23
Initially designing controls for water wheels in the early 1900s, Woodward (NASDAQ: WWD) designs, services, and manufactures energy control products and optimization solutions.
Why Are We Wary of WWD?
- Annual revenue growth of 4.9% over the last five years was below our standards for the industrials sector
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 7.1% annually
- Free cash flow margin shrank by 11.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $238 per share, Woodward trades at 32.8x forward P/E. If you’re considering WWD for your portfolio, see our FREE research report to learn more.
Corning (GLW)
Rolling One-Year Beta: 1.21
Supplying windows for some of the United States’s earliest spacecraft, Corning (NYSE: GLW) provides glass and other electronic components for the consumer electronics, telecommunications, automotive, and healthcare industries.
Why Does GLW Fall Short?
- Sizable revenue base leads to growth challenges as its 4% annual revenue increases over the last two years fell short of other industrials companies
- Free cash flow margin dropped by 4.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- ROIC of 5.9% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
Corning is trading at $79.58 per share, or 31.8x forward P/E. Check out our free in-depth research report to learn more about why GLW doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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