Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.
Edgewell Personal Care (EPC)
Rolling One-Year Beta: 0.89
Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.
Why Do We Avoid EPC?
- 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
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- Free cash flow margin dropped by 2.7 percentage points over the last year, implying the company became more capital intensive as competition picked up
At $30.20 per share, Edgewell Personal Care trades at 9.3x forward price-to-earnings. To fully understand why you should be careful with EPC, check out our full research report (it’s free).
Wyndham (WH)
Rolling One-Year Beta: 0.91
Established in 1981, Wyndham (NYSE:WH) is a global hotel franchising company with over 9,000 hotels across nearly 95 countries on six continents.
Why Does WH Fall Short?
- Revenue per room has underperformed over the past two years, suggesting it may need to develop new facilities
- Projected sales growth of 6% for the next 12 months suggests sluggish demand
- Underwhelming 9.4% return on capital reflects management’s difficulties in finding profitable growth opportunities
Wyndham is trading at $83.20 per share, or 17.5x forward price-to-earnings. Check out our free in-depth research report to learn more about why WH doesn’t pass our bar.
Graphic Packaging Holding (GPK)
Rolling One-Year Beta: 0.76
Founded in 1991, Graphic Packaging (NYSE:GPK) is a provider of paper-based packaging solutions for a wide range of products.
Why Should You Dump GPK?
- Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Forecasted revenue decline of 1.7% for the upcoming 12 months implies demand will fall even further
- Free cash flow margin shrank by 7.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Graphic Packaging Holding’s stock price of $25.91 implies a valuation ratio of 9.4x forward price-to-earnings. If you’re considering GPK for your portfolio, see our FREE research report to learn more.
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 5 Strong Momentum 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.