3 Low-Volatility Stocks with Mounting Challenges

A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.

Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.

Take-Two (TTWO)

Rolling One-Year Beta: 0.74

Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.

Why Does TTWO Worry Us?

1. EBITDA margin fell by 8.3 percentage points over the last few years as it prioritized growth over profits
2. Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 109% annually
3. Long-term business health is up for debate as its cash burn has increased over the last few years

Take-Two is trading at $239.54 per share, or 20.1x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than TTWO.

Clorox (CLX)

Rolling One-Year Beta: 0.07

Founded in 1913 with bleach as the sole product offering, Clorox (NYSE:CLX) today is a consumer products giant whose product portfolio spans everything from bleach to skincare to salad dressing to kitty litter.

Why Does CLX Give Us Pause?

1. Sales stagnated over the last three years and signal the need for new growth strategies
2. Projected sales decline of 1% for the next 12 months points to an even tougher demand environment ahead

Clorox’s stock price of $120.88 implies a valuation ratio of 16.6x forward P/E. To fully understand why you should be careful with CLX, check out our full research report (it’s free).

Flowers Foods (FLO)

Rolling One-Year Beta: -0.07

With Wonder Bread as its premier brand, Flower Foods (NYSE:FLO) is a packaged foods company that focuses on bakery products such as breads, buns, and cakes.

Why Are We Hesitant About FLO?

1. Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
2. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
3. Flat earnings per share over the last three years underperformed the sector average

At $15.87 per share, Flowers Foods trades at 13.6x forward P/E. If you’re considering FLO for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

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