3 Low-Volatility Stocks That Fall Short

Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.

Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.

Sportsman's Warehouse (SPWH)

Rolling One-Year Beta: 0.33

A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse (NASDAQ:SPWH) is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.

Why Do We Steer Clear of SPWH?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Earnings per share decreased by more than its revenue over the last three years, partly because it diluted shareholders
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Sportsman's Warehouse’s stock price of $1.47 implies a valuation ratio of 24.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SPWH in your portfolio.

Herbalife (HLF)

Rolling One-Year Beta: 0.17

With the first products sold out of the trunk of the founder’s car, Herbalife (NYSE:HLF) today offers a portfolio of shakes, supplements, personal care products, and weight management programs to help customers reach their nutritional and fitness goals.

Why Does HLF Worry Us?

1. Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
2. Anticipated sales growth of 2.9% for the next year implies demand will be shaky
3. Issuance of new shares over the last three years caused its earnings per share to fall by 15.9% annually, even worse than its revenue declines

Herbalife is trading at $16.90 per share, or 6.3x forward P/E. To fully understand why you should be careful with HLF, check out our full research report (it’s free).

Ellington Financial (EFC)

Rolling One-Year Beta: 0.35

Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE:EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.

Why Do We Pass on EFC?

1. Performance over the past five years shows its incremental sales were less profitable, as its 1.6% annual earnings per share growth trailed its revenue gains
2. Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 4% annually over the last five years
3. Low return on equity reflects management’s struggle to allocate funds effectively

At $13.58 per share, Ellington Financial trades at 1x forward P/B. If you’re considering EFC for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.