Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here are three low-volatility stocks to steer clear of and a few better alternatives.
Kohl's (KSS)
Rolling One-Year Beta: 0.75
Founded as a corner grocery store in Milwaukee, Wisconsin, Kohl’s (NYSE:KSS) is a department store chain that sells clothing, cosmetics, electronics, and home goods.
Why Do We Steer Clear of KSS?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $6.98 per share, Kohl's trades at 5.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than KSS.
Monarch (MCRI)
Rolling One-Year Beta: 0.70
Established in 1993, Monarch (NASDAQ:MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Why Do We Think Twice About MCRI?
- 4% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Estimated sales growth of 2% for the next 12 months implies demand will slow from its two-year trend
- ROIC of 14.4% reflects management’s challenges in identifying attractive investment opportunities
Monarch’s stock price of $77.22 implies a valuation ratio of 7.9x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including MCRI in your portfolio.
News Corp (NWSA)
Rolling One-Year Beta: 0.79
Established in 2013 after a restructuring, News Corp (NASDAQ:NWSA) is a multinational conglomerate known for its news publishing, broadcasting, digital media, and book publishing.
Why Are We Out on NWSA?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Projected sales decline of 8.8% over the next 12 months indicates demand will continue deteriorating
- Underwhelming 6.1% return on capital reflects management’s difficulties in finding profitable growth opportunities
News Corp is trading at $26.92 per share, or 29.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than NWSA.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.