3 Volatile Stocks 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 are three volatile stocks to avoid and some better opportunities instead.

Texas Instruments (TXN)

Rolling One-Year Beta: 1.11

Headquartered in Dallas, Texas since the 1950s, Texas Instruments (NASDAQ:TXN) is the world’s largest producer of analog semiconductors.

Why Does TXN Worry Us?

1. Annual sales declines of 9.3% for the past two years show its products and services struggled to connect with the market during this cycle
2. Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 8.4 percentage points
3. 32.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Texas Instruments is trading at $165.08 per share, or 28.6x forward P/E. Dive into our free research report to see why there are better opportunities than TXN.

Littelfuse (LFUS)

Rolling One-Year Beta: 1.69

The developer of the first blade-type automotive fuse, Littelfuse (NASDAQ:LFUS) provides electrical protection and control components for the automotive, industrial, electronics, and telecommunications industries.

Why Do We Avoid LFUS?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 6% annually over the last two years
2. Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 24.1% annually, worse than its revenue
3. Eroding returns on capital suggest its historical profit centers are aging

At $191.09 per share, Littelfuse trades at 19.6x forward P/E. Check out our free in-depth research report to learn more about why LFUS doesn’t pass our bar.

Benchmark (BHE)

Rolling One-Year Beta: 1.52

Operating as a critical behind-the-scenes partner for complex technology products since 1979, Benchmark Electronics (NYSE:BHE) provides advanced manufacturing, engineering, and technology solutions for original equipment manufacturers across aerospace, medical, industrial, and technology sectors.

Why Is BHE Not Exciting?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 5.8% annually over the last two years
2. Low free cash flow margin of 1% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Underwhelming 7.3% return on capital reflects management’s difficulties in finding profitable growth opportunities

Benchmark’s stock price of $34.66 implies a valuation ratio of 13.4x forward P/E. If you’re considering BHE for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 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.