3 Low-Volatility Stocks That Concern Us

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. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.

Home Depot (HD)

Rolling One-Year Beta: 0.71

Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE:HD) is a home improvement retailer that sells everything from tools to building materials to appliances.

Why Do We Think Twice About HD?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Estimated sales growth of 1.4% for the next 12 months implies demand will slow from its six-year trend
3. Free cash flow margin dropped by 2.4 percentage points over the last year, implying the company became more capital intensive as competition picked up

Home Depot’s stock price of $407.54 implies a valuation ratio of 26x forward P/E. Check out our free in-depth research report to learn more about why HD doesn’t pass our bar.

Clorox (CLX)

Rolling One-Year Beta: 0.19

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 Are We Wary of CLX?

1. Flat sales over the last three years suggest it must innovate and find new ways to grow
2. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
3. Estimated sales decline of 8.2% for the next 12 months implies an even more challenging demand environment

Clorox is trading at $119.07 per share, or 18.8x forward P/E. To fully understand why you should be careful with CLX, check out our full research report (it’s free).

Dentsply Sirona (XRAY)

Rolling One-Year Beta: 0.47

With roots dating back to 1877 when it introduced the first dental electric drill, Dentsply Sirona (NASDAQ:XRAY) manufactures and sells professional dental equipment, technologies, and consumable products used by dentists and specialists worldwide.

Why Do We Avoid XRAY?

1. Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
2. Negative returns on capital show that some of its growth strategies have backfired, and its falling returns suggest its earlier profit pools are drying up
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $14.43 per share, Dentsply Sirona trades at 7.4x forward P/E. Dive into our free research report to see why there are better opportunities than XRAY.

High-Quality Stocks for All Market Conditions

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