Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. Keeping that in mind, here are three volatile stocks to steer clear of and a few better alternatives.
VSE Corporation (VSEC)
Rolling One-Year Beta: 1.12
With roots dating back to 1959 and a strategic focus on extending the life of transportation assets, VSE Corporation (NASDAQ: VSEC) provides aftermarket parts distribution and maintenance, repair, and overhaul services for aircraft and vehicle fleets in commercial and government markets.
Why Does VSEC Fall Short?
- Gross margin of 17.3% reflects its high production costs
- Negative free cash flow raises questions about the return timeline for its investments
- Underwhelming 5.1% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $172.77 per share, VSE Corporation trades at 44.1x forward P/E. Check out our free in-depth research report to learn more about why VSEC doesn’t pass our bar.
First Advantage (FA)
Rolling One-Year Beta: 1.07
Processing approximately 100 million background checks annually across more than 200 countries and territories, First Advantage (NASDAQ: FA) provides employment background screening, identity verification, and compliance solutions to help companies manage hiring risks.
Why Are We Hesitant About FA?
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 4.6% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 15.1 percentage points
- ROIC of 0.9% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up
First Advantage’s stock price of $14.67 implies a valuation ratio of 12.8x forward P/E. If you’re considering FA for your portfolio, see our FREE research report to learn more.
PAR Technology (PAR)
Rolling One-Year Beta: 1.26
Originally founded in 1968 as a defense contractor for the U.S. government, PAR Technology (NYSE: PAR) provides cloud-based software, payment processing, and hardware solutions that help restaurants manage everything from point-of-sale to customer loyalty programs.
Why Does PAR Give Us Pause?
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Push for growth has led to negative returns on capital, signaling value destruction
PAR Technology is trading at $36.28 per share, or 90.4x forward P/E. Read our free research report to see why you should think twice about including PAR in your portfolio.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
