Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. Keeping that in mind, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Figs (FIGS)
Rolling One-Year Beta: 0.64
Rising to fame via TikTok and founded in 2013 by Heather Hasson and Trina Spear, Figs (NYSE:FIGS) is a healthcare apparel company known for its stylish approach to medical attire and uniforms.
Why Does FIGS Give Us Pause?
- Sluggish trends in its active customers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
- Push for growth has led to negative returns on capital, signaling value destruction
Figs’s stock price of $5.81 implies a valuation ratio of 75.9x forward P/E. Check out our free in-depth research report to learn more about why FIGS doesn’t pass our bar.
Warner Music Group (WMG)
Rolling One-Year Beta: 0.67
Launching the careers of legendary artists like Frank Sinatra, Warner Music Group (NASDAQ:WMG) is a music company managing a diverse portfolio of artists, recordings, and music publishing services worldwide.
Why Does WMG Worry Us?
- Muted 4.4% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
- Estimated sales growth of 3.7% for the next 12 months is soft and implies weaker demand
- Underwhelming 10.6% return on capital reflects management’s difficulties in finding profitable growth opportunities
Warner Music Group is trading at $30.91 per share, or 10.8x forward EV-to-EBITDA. To fully understand why you should be careful with WMG, check out our full research report (it’s free).
CooperCompanies (COO)
Rolling One-Year Beta: 0.66
With a history dating back to 1958 and a portfolio spanning two distinct healthcare segments, Cooper Companies (NASDAQ:COO) develops and manufactures medical devices focused on vision care through contact lenses and women's health including fertility products and services.
Why Are We Hesitant About COO?
- 6.4 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
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $72.90 per share, CooperCompanies trades at 17.5x forward P/E. If you’re considering COO for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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