Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. Keeping that in mind, here are three volatile stocks best left to the gamblers and some better opportunities instead.
Tilly's (TLYS)
Rolling One-Year Beta: 1.18
With an emphasis on skate and surf culture, Tilly’s (NYSE: TLYS) is a specialty retailer that sells clothing, footwear, and accessories geared towards fashion-forward teens and young adults.
Why Are We Out on TLYS?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly
Tilly's is trading at $1.95 per share, or 0.1x forward price-to-sales. To fully understand why you should be careful with TLYS, check out our full research report (it’s free for active Edge members).
Sirius XM (SIRI)
Rolling One-Year Beta: 1.17
Known for its commercial-free music channels, Sirius XM (NASDAQ: SIRI) is a broadcasting company that provides satellite radio and online radio services across North America.
Why Do We Think SIRI Will Underperform?
- Performance surrounding its core subscribers has lagged its peers
- Poor free cash flow margin of 12.3% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Sirius XM’s stock price of $20.05 implies a valuation ratio of 6.6x forward P/E. Read our free research report to see why you should think twice about including SIRI in your portfolio.
Zions Bancorporation (ZION)
Rolling One-Year Beta: 1.42
Founded in 1873 during Utah's pioneer era and named after Mount Zion in the Bible, Zions Bancorporation (NASDAQ: ZION) operates seven regional banks across the Western United States, providing commercial, retail, and wealth management services to over a million customers.
Why Does ZION Give Us Pause?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Projected net interest income decline of 37.3% for the next 12 months points to a tough demand environment ahead
- Flat earnings per share over the last two years lagged its peers
At $58.44 per share, Zions Bancorporation trades at 1.2x forward P/B. If you’re considering ZION for your portfolio, see our FREE research report to learn more.
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