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. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.
Take-Two (TTWO)
Rolling One-Year Beta: 0.74
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.
Why Does TTWO Worry Us?
- EBITDA margin fell by 8.3 percentage points over the last few years as it prioritized growth over profits
- Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 109% annually
- Long-term business health is up for debate as its cash burn has increased over the last few years
Take-Two is trading at $239.54 per share, or 20.1x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than TTWO.
Clorox (CLX)
Rolling One-Year Beta: 0.07
Founded in 1913 with bleach as the sole product offering, Clorox (NYSE:CLX) today is a consumer products giant whose product portfolio spans everything from bleach to skincare to salad dressing to kitty litter.
Why Does CLX Give Us Pause?
- Sales stagnated over the last three years and signal the need for new growth strategies
- Projected sales decline of 1% for the next 12 months points to an even tougher demand environment ahead
Clorox’s stock price of $120.88 implies a valuation ratio of 16.6x forward P/E. To fully understand why you should be careful with CLX, check out our full research report (it’s free).
Flowers Foods (FLO)
Rolling One-Year Beta: -0.07
With Wonder Bread as its premier brand, Flower Foods (NYSE:FLO) is a packaged foods company that focuses on bakery products such as breads, buns, and cakes.
Why Are We Hesitant About FLO?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Flat earnings per share over the last three years underperformed the sector average
At $15.87 per share, Flowers Foods trades at 13.6x forward P/E. If you’re considering FLO for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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