Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
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.
BrightView (BV)
Rolling One-Year Beta: 0.85
An official field consultant for Major League Baseball, BrightView (NYSE: BV) offers landscaping design, development, and maintenance.
Why Do We Steer Clear of BV?
- Annual sales declines of 2.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share have dipped by 1.7% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
BrightView is trading at $12.68 per share, or 16.8x forward P/E. Dive into our free research report to see why there are better opportunities than BV.
Labcorp (LH)
Rolling One-Year Beta: 0.51
With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE: LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.
Why Does LH Fall Short?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 12.3 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
Labcorp’s stock price of $251.11 implies a valuation ratio of 14.7x forward P/E. To fully understand why you should be careful with LH, check out our full research report (it’s free for active Edge members).
Trustmark (TRMK)
Rolling One-Year Beta: 0.89
Tracing its roots back to 1889 in Mississippi, Trustmark (NASDAQ: TRMK) is a financial services organization providing banking, wealth management, insurance, and mortgage services across five southeastern states.
Why Are We Cautious About TRMK?
- Annual net interest income growth of 8.6% over the last five years was below our standards for the banking sector
- Overall productivity is expected to decrease over the next year as Wall Street thinks its efficiency ratio will degrade by 1.7 percentage points
- ROE of 7.2% reflects management’s challenges in identifying attractive investment opportunities
At $38.94 per share, Trustmark trades at 1.1x forward P/B. Check out our free in-depth research report to learn more about why TRMK doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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