1 Volatile Stock with Solid Fundamentals and 2 We Avoid

TER Cover Image

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 is one volatile stock with massive upside potential and two that could just as easily collapse.

Two Stocks to Sell:

Teradyne (TER)

Rolling One-Year Beta: 1.54

Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ: TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.

Why Does TER Fall Short?

  1. Sales tumbled by 1.1% annually over the last five years, showing market trends are working against its favor during this cycle
  2. Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 6.6% annually, worse than its revenue
  3. Free cash flow margin dropped by 8.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Teradyne’s stock price of $251.17 implies a valuation ratio of 46.3x forward P/E. Read our free research report to see why you should think twice about including TER in your portfolio.

Jabil (JBL)

Rolling One-Year Beta: 1.66

With manufacturing facilities spanning the globe from China to Mexico to the United States, Jabil (NYSE: JBL) provides electronics design, manufacturing, and supply chain solutions to companies across various industries, from healthcare to automotive to cloud computing.

Why Does JBL Give Us Pause?

  1. Customers postponed purchases of its products and services this cycle as its revenue declined by 3.6% annually over the last two years
  2. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 9.2% annually
  3. Low free cash flow margin of 3.4% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

At $241.53 per share, Jabil trades at 20.2x forward P/E. Check out our free in-depth research report to learn more about why JBL doesn’t pass our bar.

One Stock to Watch:

Medpace (MEDP)

Rolling One-Year Beta: 0.96

Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ: MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.

Why Should MEDP Be on Your Watchlist?

  1. Core business can prosper without any help from acquisitions as its organic revenue growth averaged 15.1% over the past two years
  2. Exciting sales outlook for the upcoming 12 months calls for 17.9% growth, an acceleration from its two-year trend
  3. Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

Medpace is trading at $597.69 per share, or 37.8x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

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