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.
Rush Enterprises (RUSHA)
Rolling One-Year Beta: 0.89
Headquartered in Texas, Rush Enterprises (NASDAQ: RUSH.A) provides truck-related services and solutions, including sales, leasing, parts, and maintenance for commercial vehicles.
Why Do We Steer Clear of RUSHA?
- Sales trends were unexciting over the last two years as its 2.2% annual growth was below the typical industrials company
- Projected sales decline of 1.5% for the next 12 months points to a tough demand environment ahead
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
Rush Enterprises is trading at $48.75 per share, or 7.8x forward EV-to-EBITDA. If you’re considering RUSHA for your portfolio, see our FREE research report to learn more.
Douglas Dynamics (PLOW)
Rolling One-Year Beta: 0.59
Once manufacturing snowplows designed for the iconic jeep vehicle precursor, Douglas Dynamics (NYSE: PLOW) offers snow and ice equipment for the roads and sidewalks.
Why Is PLOW Risky?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.4% annually while its revenue grew
- Free cash flow margin dropped by 5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $26.75 per share, Douglas Dynamics trades at 13.9x forward P/E. Check out our free in-depth research report to learn more about why PLOW doesn’t pass our bar.
Henry Schein (HSIC)
Rolling One-Year Beta: 0.31
With a vast inventory of over 300,000 products stocked in distribution centers spanning more than 5.3 million square feet worldwide, Henry Schein (NASDAQ: HSIC) is a global distributor of healthcare products and services primarily to dental practices, medical offices, and other healthcare facilities.
Why Are We Wary of HSIC?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Estimated sales growth of 3.3% for the next 12 months is soft and implies weaker demand
- Eroding returns on capital suggest its historical profit centers are aging
Henry Schein’s stock price of $68.89 implies a valuation ratio of 13.9x forward P/E. Dive into our free research report to see why there are better opportunities than HSIC.
Stocks We Like More
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