Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are three volatile stocks to steer clear of and a few better alternatives.
Jamf (JAMF)
Rolling One-Year Beta: 1.27
With its name playfully derived from "Just Another Management Framework," Jamf (NASDAQ: JAMF) provides software that helps organizations deploy, manage, and secure Apple devices across their workforce while maintaining a seamless user experience.
Why Is JAMF Not Exciting?
- Revenue increased by 16.3% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Poor expense management has led to operating margin losses
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Jamf is trading at $9.08 per share, or 1.6x forward price-to-sales. Read our free research report to see why you should think twice about including JAMF in your portfolio.
MasterCraft (MCFT)
Rolling One-Year Beta: 1.24
Started by a waterskiing instructor, MasterCraft (NASDAQ: MCFT) specializes in designing, manufacturing, and selling sport boats.
Why Are We Hesitant About MCFT?
- Performance surrounding its boats sold has lagged its peers
- Sales were less profitable over the last five years as its earnings per share fell by 7% annually, worse than its revenue declines
- Eroding returns on capital suggest its historical profit centers are aging
MasterCraft’s stock price of $22.30 implies a valuation ratio of 19.1x forward P/E. If you’re considering MCFT for your portfolio, see our FREE research report to learn more.
MillerKnoll (MLKN)
Rolling One-Year Beta: 1.23
Created through the 2021 merger of industry icons Herman Miller and Knoll, MillerKnoll (NASDAQ: MLKN) designs, manufactures, and distributes interior furnishings for offices, healthcare facilities, educational settings, and homes worldwide.
Why Are We Out on MLKN?
- Annual sales declines of 5.2% for the past two years show its products and services struggled to connect with the market during this cycle
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.4 percentage points
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $20.98 per share, MillerKnoll trades at 10.9x forward P/E. Check out our free in-depth research report to learn more about why MLKN doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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