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.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.
Chewy (CHWY)
Rolling One-Year Beta: 0.71
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Do We Think Twice About CHWY?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 9% over the last three years was below our standards for the consumer internet sector
- Estimated sales growth of 5.8% for the next 12 months implies demand will slow from its three-year trend
- Gross margin of 29.2% is below its competitors, leaving less money to invest in areas like marketing and R&D
At $37.90 per share, Chewy trades at 20.6x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than CHWY.
Noodles (NDLS)
Rolling One-Year Beta: 0.90
Offering pasta, mac and cheese, pad thai, and more, Noodles & Company (NASDAQ: NDLS) is a casual restaurant chain that serves all manner of noodles from around the world.
Why Should You Dump NDLS?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Earnings per share fell by 47.8% annually over the last six years while its revenue grew, showing its incremental sales were much less profitable
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Noodles is trading at $0.64 per share, or 2x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why NDLS doesn’t pass our bar.
Waters Corporation (WAT)
Rolling One-Year Beta: 0.63
Founded in 1958 and pioneering innovations in laboratory analysis for over six decades, Waters (NYSE: WAT) develops and manufactures analytical instruments, software, and consumables for liquid chromatography, mass spectrometry, and thermal analysis used in scientific research and quality testing.
Why Does WAT Give Us Pause?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Eroding returns on capital suggest its historical profit centers are aging
Waters Corporation’s stock price of $302.48 implies a valuation ratio of 22.3x forward P/E. To fully understand why you should be careful with WAT, check out our full research report (it’s free).
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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
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