1 Volatile Stock for Long-Term Investors and 2 Facing Headwinds

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.

At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here is one volatile stock that could deliver huge gains and two that could just as easily collapse.

Two Stocks to Sell:

Trex (TREX)

Rolling One-Year Beta: 1.19

Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE:TREX) makes wood-alternative decking, railing, and patio furniture.

Why Should You Dump TREX?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.1 percentage points
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $41.71 per share, Trex trades at 27.1x forward P/E. To fully understand why you should be careful with TREX, check out our full research report (it’s free).

Webster Financial (WBS)

Rolling One-Year Beta: 1.27

Founded during the Great Depression in 1935 and evolving into a major Northeastern financial institution, Webster Financial (NYSE:WBS) is a bank holding company that provides commercial banking, consumer banking, and employee benefits solutions through its Webster Bank and HSA Bank division.

Why Does WBS Worry Us?

1. Annual revenue growth of 3.7% over the last two years was below our standards for the banking sector
2. Efficiency ratio is expected to worsen by 2.5 percentage points over the next year
3. Earnings per share were flat over the last two years while its revenue grew, showing its incremental sales were less profitable

Webster Financial is trading at $64.61 per share, or 1x forward P/B. Check out our free in-depth research report to learn more about why WBS doesn’t pass our bar.

One Stock to Buy:

Napco (NSSC)

Rolling One-Year Beta: 1.08

Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ:NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.

Why Do We Love NSSC?

1. Annual revenue growth of 13.7% over the last five years was superb and indicates its market share increased during this cycle
2. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy
3. Returns on capital are climbing as management makes more lucrative bets

Napco’s stock price of $38.86 implies a valuation ratio of 27.7x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 6 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.