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. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.

Fortive (FTV)

Rolling One-Year Beta: 0.93

Taking its name from the Latin root of "strong", Fortive (NYSE: FTV) manufactures products and develops industrial software for numerous industries.

Why Should You Sell FTV?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.1%
3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up

Fortive is trading at $47.75 per share, or 17.7x forward P/E. Check out our free in-depth research report to learn more about why FTV doesn’t pass our bar.

Lennar (LEN)

Rolling One-Year Beta: 0.61

One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.

Why Do We Steer Clear of LEN?

1. Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 20.4% declines over the past two years
2. Earnings per share fell by 11.2% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
3. 13.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Lennar’s stock price of $131.80 implies a valuation ratio of 12.4x forward P/E. Read our free research report to see why you should think twice about including LEN in your portfolio.

Cincinnati Financial (CINF)

Rolling One-Year Beta: 0.59

Founded in 1950 by independent insurance agents seeking stable market options for their clients, Cincinnati Financial (NASDAQ: CINF) provides property casualty insurance, life insurance, and related financial services through independent agencies across 46 states.

Why Does CINF Fall Short?

1. Sizable revenue base leads to growth challenges as its 6.8% annual revenue increases over the last five years fell short of other insurance companies
2. Expenses have increased as a percentage of revenue over the last four years as its combined ratio degraded by 8.4 percentage points
3. Estimated book value per share growth of 2.8% for the next 12 months implies profitability will slow from its two-year trend

At $149.79 per share, Cincinnati Financial trades at 1.6x forward P/B. If you’re considering CINF for your portfolio, see our FREE research report to learn more.

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