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. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.
Altice (ATUS)
Rolling One-Year Beta: 0.84
Based in Long Island City, Altice USA (NYSE: ATUS) is a telecommunications company offering cable, internet, telephone, and television services across the United States.
Why Should You Sell ATUS?
- Demand for its offerings was relatively low as its number of broadband subscribers has underwhelmed
- Sales were less profitable over the last five years as its earnings per share fell by 31.1% annually, worse than its revenue declines
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Altice is trading at $2.40 per share, or 0.3x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than ATUS.
Churchill Downs (CHDN)
Rolling One-Year Beta: 0.60
Famous for hosting the Kentucky Derby, Churchill Downs (NASDAQ: CHDN) operates a horse racing, online wagering, and gaming entertainment business in the United States.
Why Does CHDN Worry Us?
- Muted 13.6% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
- Estimated sales growth of 5.3% for the next 12 months implies demand will slow from its two-year trend
- Low returns on capital reflect management’s struggle to allocate funds effectively
Churchill Downs’s stock price of $98.14 implies a valuation ratio of 14.3x forward P/E. If you’re considering CHDN for your portfolio, see our FREE research report to learn more.
Stratasys (SSYS)
Rolling One-Year Beta: 0.90
Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ: SSYS) offers 3D printers and related materials, software, and services to many industries.
Why Are We Out on SSYS?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Poor expense management has led to operating margin losses
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.9 percentage points
At $11.23 per share, Stratasys trades at 31.3x forward P/E. Read our free research report to see why you should think twice about including SSYS in your portfolio.
High-Quality Stocks for All Market Conditions
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