3 Volatile Stocks with Questionable Fundamentals

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. Keeping that in mind, here are three volatile stocks to steer clear of and a few better alternatives.

Magnachip (MX)

Rolling One-Year Beta: 1.17

With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE:MX) is a provider of analog and mixed-signal semiconductors.

Why Is MX Risky?

1. Annual sales declines of 18.3% for the past five years show its products and services struggled to connect with the market during this cycle
2. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
3. Cash burn has widened over the last five years, making us question whether it can reliably generate shareholder value

Magnachip is trading at $3 per share, or 0.6x forward price-to-sales. Check out our free in-depth research report to learn more about why MX doesn’t pass our bar.

CarGurus (CARG)

Rolling One-Year Beta: 1.55

Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ:CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.

Why Does CARG Worry Us?

1. Likely needs to improve its platform or increase its marketing budget for penetration to accelerate as its paying dealers were flat over the last two years
2. Anticipated sales growth of 5.3% for the next year implies demand will be shaky
3. Earnings growth underperformed the sector average over the last three years as its EPS grew by just 5.2% annually

At $27.90 per share, CarGurus trades at 10.7x forward EV/EBITDA. Read our free research report to see why you should think twice about including CARG in your portfolio.

REV Group (REVG)

Rolling One-Year Beta: 1.98

Offering the first full-electric North American fire truck, REV (NYSE:REVG) manufactures and sells specialty vehicles.

Why Are We Hesitant About REVG?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 11.7%
3. Operating margin of 2.5% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments

REV Group’s stock price of $33.47 implies a valuation ratio of 13.3x forward P/E. To fully understand why you should be careful with REVG, check out our full research report (it’s free).

Stocks That Overcame Trump’s 2018 Tariffs

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.