Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are two volatile stocks that could reward patient investors and one that might not be worth the risk.
One Stock to Sell:
Hexcel (HXL)
Rolling One-Year Beta: 1.13
Founded shortly after World War II by a group of engineers from UC Berkley, Hexcel (NYSE:HXL) manufactures lightweight composite materials primarily for the aerospace and defense sectors.
Why Do We Think Twice About HXL?
- Sales tumbled by 3.8% annually over the last five years, showing market trends are working against its favor during this cycle
- Earnings per share have contracted by 10.1% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
- 8 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
Hexcel is trading at $54.39 per share, or 23.9x forward P/E. Read our free research report to see why you should think twice about including HXL in your portfolio.
Two Stocks to Buy:
Nova (NVMI)
Rolling One-Year Beta: 1.79
Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.
Why Will NVMI Beat the Market?
- Impressive 14.3% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Robust free cash flow margin of 28.6% gives it many options for capital deployment, and its growing cash flow gives it even more resources to deploy
- ROIC punches in at 31.2%, illustrating management’s expertise in identifying profitable investments
Nova’s stock price of $231.17 implies a valuation ratio of 28x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Badger Meter (BMI)
Rolling One-Year Beta: 1.18
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE:BMI) provides water control and measure equipment to various industries.
Why Should You Buy BMI?
- Annual revenue growth of 20% over the last two years was superb and indicates its market share increased during this cycle
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 36.4% annually
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $243.58 per share, Badger Meter trades at 51.9x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. 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 Comfort Systems (+782% 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