3 Low-Volatility Stocks We Think Twice About

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 to steer clear of and a few better alternatives.

Illinois Tool Works (ITW)

Rolling One-Year Beta: 0.82

Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE:ITW) manufactures engineered components and specialized equipment for numerous industries.

Why Are We Hesitant About ITW?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Estimated sales growth of 3.7% for the next 12 months is soft and implies weaker demand
3. Earnings per share lagged its peers over the last two years as they only grew by 6.2% annually

Illinois Tool Works’s stock price of $266.24 implies a valuation ratio of 25x forward P/E. Read our free research report to see why you should think twice about including ITW in your portfolio.

CoStar (CSGP)

Rolling One-Year Beta: 0.74

With a research department that makes over 10,000 property updates daily to its 35-year-old database, CoStar Group (NASDAQ:CSGP) provides comprehensive real estate data, analytics, and online marketplaces for commercial and residential properties in the U.S. and U.K.

Why Are We Cautious About CSGP?

1. Incremental sales over the last five years were much less profitable as its earnings per share fell by 3.7% annually while its revenue grew
2. Free cash flow margin dropped by 15.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $89.09 per share, CoStar trades at 83.4x forward P/E. Check out our free in-depth research report to learn more about why CSGP doesn’t pass our bar.

CNA Financial (CNA)

Rolling One-Year Beta: 0.52

With roots dating back to 1853 and majority ownership by Loews Corporation, CNA Financial (NYSE:CNA) is a commercial property and casualty insurance provider offering coverage for businesses, including professional liability, surety bonds, and specialized risk management services.

Why Are We Out on CNA?

1. Large revenue base constrains its growth potential, as seen in its unexciting 7.4% annualized increases in net premiums earned over the last five years fell below our expectations for the insurance sector
2. Performance over the past two years shows its incremental sales were less profitable, as its 5.7% annual earnings per share growth trailed its revenue gains
3. Book value per share tumbled by 1.7% annually over the last five years, showing insurance sector trends are working against its favor during this cycle

CNA Financial is trading at $48.01 per share, or 0.8x forward price-to-sales. If you’re considering CNA for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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