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.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. That said, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Carriage Services (CSV)
Rolling One-Year Beta: 0.62
Established in 1991, Carriage Services (NYSE: CSV) is a provider of funeral and cemetery services in the United States.
Why Do We Steer Clear of CSV?
- Muted 5.7% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Poor free cash flow margin of 12.6% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Stagnant returns on capital show management has failed to improve the company’s business quality
Carriage Services’s stock price of $44.30 implies a valuation ratio of 13.2x forward P/E. If you’re considering CSV for your portfolio, see our FREE research report to learn more.
Graco (GGG)
Rolling One-Year Beta: 0.79
Founded in 1926, Graco (NYSE: GGG) is an industrial company specializing in the development and manufacturing of fluid-handling systems and products.
Why Does GGG Fall Short?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Earnings per share have dipped by 1.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
Graco is trading at $93.42 per share, or 29.7x forward P/E. Dive into our free research report to see why there are better opportunities than GGG.
Stellar Bancorp (STEL)
Rolling One-Year Beta: 0.60
Created through strategic mergers to serve the growing Texas business community, Stellar Bancorp (NYSE: STEL) is a Texas bank holding company that provides commercial banking services primarily to small and medium-sized businesses and professionals.
Why Should You Sell STEL?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.2% annually over the last two years
- Net interest margin dropped by 35.6 basis points (100 basis points = 1 percentage point) over the last two years, implying the firm’s loan book profitability fell as competitors entered the market
- Sales were less profitable over the last two years as its earnings per share fell by 15.1% annually, worse than its revenue declines
At $38.73 per share, Stellar Bancorp trades at 1.1x forward P/B. To fully understand why you should be careful with STEL, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
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