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 avoid and some better opportunities instead.

ScanSource (SCSC)

Rolling One-Year Beta: 1.32

Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ: SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers.

Why Do We Avoid SCSC?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 10.4% annually over the last two years
2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
3. ROIC of 7.8% reflects management’s challenges in identifying attractive investment opportunities

At $32.96 per share, ScanSource trades at 9x forward price-to-earnings. Read our free research report to see why you should think twice about including SCSC in your portfolio.

Boot Barn (BOOT)

Rolling One-Year Beta: 1.38

With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE: BOOT) is a western-inspired apparel and footwear retailer.

Why Are We Hesitant About BOOT?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
2. Revenue base of $1.85 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 3.7 percentage points

Boot Barn is trading at $102.59 per share, or 15.6x forward price-to-earnings. To fully understand why you should be careful with BOOT, check out our full research report (it’s free).

Shoe Carnival (SCVL)

Rolling One-Year Beta: 1.26

Known for its playful atmosphere that features carnival elements, Shoe Carnival (NASDAQ: SCVL) is a retailer that sells footwear from mainstream brands for the entire family.

Why Is SCVL Risky?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Modest revenue base of $1.20 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
3. Forecasted revenue decline of 1.4% for the upcoming 12 months implies demand will fall off a cliff

Shoe Carnival’s stock price of $18.83 implies a valuation ratio of 6.2x forward price-to-earnings. If you’re considering SCVL for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.