Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.

Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.

BJ's (BJ)

Rolling One-Year Beta: 0.00

Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE: BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.

Why Does BJ Worry Us?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 18.4% that must be offset through higher volumes
3. Subpar operating margin of 3.9% constrains its ability to invest in process improvements or effectively respond to new competitive threats

At $93.61 per share, BJ's trades at 21.1x forward P/E. Check out our free in-depth research report to learn more about why BJ doesn’t pass our bar.

United Bankshares (UBSI)

Rolling One-Year Beta: 0.91

With roots dating back to 1982 and a strong presence in the Mid-Atlantic region, United Bankshares (NASDAQ: UBSI) is a bank holding company that provides commercial and retail banking services through its United Bank subsidiary across multiple states.

Why Are We Wary of UBSI?

1. Annual revenue growth of 4.7% over the last five years was below our standards for the banking sector
2. Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 3.9% annually
3. Capital trends were unexciting over the last two years as its 8.7% annual tangible book value per share growth was below the typical banking firm

United Bankshares’s stock price of $37 implies a valuation ratio of 0.9x forward P/B. If you’re considering UBSI for your portfolio, see our FREE research report to learn more.

Capital Southwest (CSWC)

Rolling One-Year Beta: 0.71

Originally founded in 1961 as a venture capital investor that helped launch Texas Instruments, Capital Southwest (NASDAQ: CSWC) is a business development company that provides debt and equity financing to middle-market companies primarily in the United States.

Why Are We Cautious About CSWC?

1. Performance over the past two years shows its incremental sales were less profitable as its earnings per share were flat

Capital Southwest is trading at $20.86 per share, or 9x forward P/E. To fully understand why you should be careful with CSWC, check out our full research report (it’s free for active Edge members).

High-Quality Stocks for All Market Conditions

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