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 that don’t make the cut and some better opportunities instead.
Sprout Social (SPT)
Rolling One-Year Beta: 0.91
Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ: SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.
Why Do We Think Twice About SPT?
- Offerings struggled to generate meaningful interest as its average billings growth of 11% over the last year did not impress
- Operating losses show it sacrificed profitability while scaling the business
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 7.6% for the last year
Sprout Social’s stock price of $11.97 implies a valuation ratio of 1.4x forward price-to-sales. If you’re considering SPT for your portfolio, see our FREE research report to learn more.
Watsco (WSO)
Rolling One-Year Beta: 0.76
Originally a manufacturing company, Watsco (NYSE: WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.
Why Are We Cautious About WSO?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Earnings per share fell by 2.2% annually over the last two years while its revenue grew, partly because it diluted shareholders
- Waning returns on capital imply its previous profit engines are losing steam
At $380.64 per share, Watsco trades at 27.5x forward P/E. Read our free research report to see why you should think twice about including WSO in your portfolio.
Quest (DGX)
Rolling One-Year Beta: 0.26
Processing approximately one-third of the adult U.S. population's lab tests annually, Quest Diagnostics (NYSE: DGX) provides laboratory testing and diagnostic information services to patients, physicians, hospitals, and other healthcare providers across the United States.
Why Are We Hesitant About DGX?
- Annual sales growth of 5.3% over the last two years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 11.1 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Quest is trading at $181.44 per share, or 18.2x forward P/E. Check out our free in-depth research report to learn more about why DGX doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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Don’t let fear keep you from great opportunities and take a look at 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 183% over the last five years (as of March 31st 2025).
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