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 that don’t make the cut and some better opportunities instead.
Asure (ASUR)
Rolling One-Year Beta: 0.81
Created from the merger of two small workforce management companies in 2007, Asure (NASDAQ: ASUR) provides cloud based payroll and HR software for small and medium-sized businesses (SMBs).
Why Does ASUR Give Us Pause?
- Revenue increased by 15.1% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Products, pricing, or go-to-market strategy may need some adjustments as its 7.9% average billings growth over the last year was weak
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 5.4 percentage points
Asure’s stock price of $9.30 implies a valuation ratio of 1.9x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ASUR.
Coty (COTY)
Rolling One-Year Beta: 0.83
With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Do We Pass on COTY?
- 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
- Forecasted revenue decline of 2.7% for the upcoming 12 months implies demand will fall off a cliff
- Low returns on capital reflect management’s struggle to allocate funds effectively
Coty is trading at $4.69 per share, or 8.4x forward P/E. If you’re considering COTY for your portfolio, see our FREE research report to learn more.
Two Harbors Investment (TWO)
Rolling One-Year Beta: 0.73
Operating in the complex world of mortgage finance since 2009, Two Harbors Investment (NYSE: TWO) is a real estate investment trust that invests in mortgage servicing rights and agency residential mortgage-backed securities.
Why Should You Dump TWO?
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 29.9% annually
- Tangible book value per share tumbled by 12% annually over the last five years, showing bank sector trends are working against its favor during this cycle
- ROE of 5.2% reflects management’s challenges in identifying attractive investment opportunities
At $10.55 per share, Two Harbors Investment trades at 0.7x forward P/B. To fully understand why you should be careful with TWO, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
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