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. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.
Advance Auto Parts (AAP)
Rolling One-Year Beta: 0.65
Founded in Virginia in 1932, Advance Auto Parts (NYSE: AAP) is an auto parts and accessories retailer that sells everything from carburetors to motor oil to car floor mats.
Why Do We Avoid AAP?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Free cash flow margin dropped by 6.7 percentage points over the last year, implying the company became more capital intensive as competition picked up
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Advance Auto Parts’s stock price of $45.50 implies a valuation ratio of 17.9x forward P/E. If you’re considering AAP for your portfolio, see our FREE research report to learn more.
Somnigroup (SGI)
Rolling One-Year Beta: 0.85
Established through the merger of Tempur-Pedic and Sealy in 2012, Somnigroup (NYSE: SGI) is a bedding manufacturer known for its innovative memory foam mattresses and sleep products
Why Are We Out on SGI?
- Annual revenue growth of 14.3% over the last five years was below our standards for the consumer discretionary sector
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 1 percentage points over the next year
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $92.97 per share, Somnigroup trades at 29.5x forward P/E. To fully understand why you should be careful with SGI, check out our full research report (it’s free for active Edge members).
ePlus (PLUS)
Rolling One-Year Beta: 0.86
Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus (NASDAQ: PLUS) provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.
Why Do We Think Twice About PLUS?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Estimated sales decline of 2.1% for the next 12 months implies an even more challenging demand environment
- Earnings per share have dipped by 5.5% annually over the past two years, which is concerning because stock prices follow EPS over the long term
ePlus is trading at $92.15 per share, or 20.8x forward P/E. Read our free research report to see why you should think twice about including PLUS in your portfolio.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
