3 Volatile Stocks with Questionable Fundamentals

Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.

Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. That said, here are three volatile stocks to steer clear of and a few better alternatives.

Kontoor Brands (KTB)

Rolling One-Year Beta: 1.47

Founded in 2019 after separating from VF Corporation, Kontoor Brands (NYSE:KTB) is a clothing company known for its high-quality denim products.

Why Do We Avoid KTB?

1. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
2. Low free cash flow margin of 13% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Kontoor Brands’s stock price of $59.74 implies a valuation ratio of 10.2x forward P/E. Check out our free in-depth research report to learn more about why KTB doesn’t pass our bar.

Ryder (R)

Rolling One-Year Beta: 1.07

As one of the first companies to introduce the idea of leasing trucks, Ryder (NYSE:R) provides rental vehicles to businesses and delivers packages directly to homes or businesses.

Why Should You Sell R?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.5% for the last two years
2. Earnings per share have contracted by 4% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Free cash flow margin dropped by 5.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up

At $191.29 per share, Ryder trades at 13.7x forward P/E. Dive into our free research report to see why there are better opportunities than R.

Alight (ALIT)

Rolling One-Year Beta: 1.29

Born from a corporate spinoff in 2017 to focus on employee experience technology, Alight (NYSE:ALIT) provides human capital management solutions that help companies administer employee benefits, payroll, and workforce management systems.

Why Do We Think ALIT Will Underperform?

1. Sales tumbled by 3.1% annually over the last five years, showing market trends are working against its favor during this cycle
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Alight is trading at $1.54 per share, or 2.6x forward P/E. Read our free research report to see why you should think twice about including ALIT in your portfolio.

Stocks We Like More

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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.