3 Volatile Stocks That Fall Short

A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren’t prepared.

These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. That said, here are three volatile stocks to steer clear of and a few better alternatives.

Dillard's (DDS)

Rolling One-Year Beta: 1.35

With stores located largely in the Southern and Western US, Dillard’s (NYSE:DDS) is a department store chain that sells clothing, cosmetics, accessories, and home goods.

Why Do We Think Twice About DDS?

1. Dearth of new stores suggests management is prioritizing the optimization of its existing locations over growth
2. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
3. Forecasted revenue decline of 2.1% for the upcoming 12 months implies demand will fall off a cliff

Dillard's is trading at $580 per share, or 21x forward P/E. To fully understand why you should be careful with DDS, check out our full research report (it’s free for active Edge members).

LSI (LYTS)

Rolling One-Year Beta: 1.45

Enhancing commercial environments, LSI (NASDAQ:LYTS) provides lighting and display solutions for businesses and retailers.

Why Are We Wary of LYTS?

1. Muted 7.4% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Estimated sales growth of 3.5% for the next 12 months implies demand will slow from its two-year trend
3. Issuance of new shares over the last two years caused its earnings per share growth of 3% to lag its revenue gains

LSI’s stock price of $22.15 implies a valuation ratio of 18.8x forward P/E. Read our free research report to see why you should think twice about including LYTS in your portfolio.

Johnson Controls (JCI)

Rolling One-Year Beta: 1.27

Founded after patenting the electric room thermostat, Johnson Controls (NYSE:JCI) specializes in building products and technology solutions, including HVAC systems, fire and security systems, and energy storage.

Why Does JCI Give Us Pause?

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. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 5% annually
3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up

At $105.55 per share, Johnson Controls trades at 24.8x forward P/E. Dive into our free research report to see why there are better opportunities than JCI.

Stocks We Like More

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