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 best left to the gamblers and some better opportunities instead.

DigitalOcean (DOCN)

Rolling One-Year Beta: 1.62

Built for simplicity in a world of complex cloud solutions, DigitalOcean (NYSE:DOCN) provides a simplified cloud computing platform that enables developers and small businesses to quickly deploy and scale applications.

Why Are We Cautious About DOCN?

1. Customers were hesitant to make long-term commitments to its software as its 14.2% average ARR growth over the last year was sluggish
2. Platform has low switching costs as its net revenue retention rate of 99.2% demonstrates high turnover
3. Gross margin of 59.5% is way below its competitors, leaving less money to invest in areas like marketing and R&D

DigitalOcean’s stock price of $67.61 implies a valuation ratio of 7.1x forward price-to-sales. Check out our free in-depth research report to learn more about why DOCN doesn’t pass our bar.

American Woodmark (AMWD)

Rolling One-Year Beta: 1.22

Starting as a small millwork shop, American Woodmark (NASDAQ:AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.

Why Do We Avoid AMWD?

1. Sales were flat over the last five years, indicating it’s failed to expand this cycle
2. Projected sales decline of 5.4% over the next 12 months indicates demand will continue deteriorating
3. Earnings per share have contracted by 6.7% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance

American Woodmark is trading at $57.77 per share, or 32.9x forward P/E. Dive into our free research report to see why there are better opportunities than AMWD.

Covenant Logistics (CVLG)

Rolling One-Year Beta: 1.25

Started with 25 trucks and 50 trailers, Covenant Logistics (NASDAQ:CVLG) is a provider of expedited long haul freight services, offering a range of logistics solutions.

Why Should You Dump CVLG?

1. Muted 2.7% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Free cash flow margin shrank by 7.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $29.41 per share, Covenant Logistics trades at 16.2x forward P/E. To fully understand why you should be careful with CVLG, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.