A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren’t prepared.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are three volatile stocks best left to the gamblers and some better opportunities instead.
Designer Brands (DBI)
Rolling One-Year Beta: 1.71
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE: DBI) is an American discount retailer focused on footwear and accessories.
Why Should You Dump DBI?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
- High net-debt-to-EBITDA ratio of 11× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Designer Brands’s stock price of $2.29 implies a valuation ratio of 9.1x forward P/E. Read our free research report to see why you should think twice about including DBI in your portfolio.
iHeartMedia (IHRT)
Rolling One-Year Beta: 2.14
Occasionally featuring celebrity hosts like Ryan Seacrest on its shows, iHeartMedia (NASDAQ: IHRT) is a leading multimedia company renowned for its extensive network of radio stations, digital platforms, and live events across the globe.
Why Is IHRT Risky?
- Products and services fail to spark excitement with consumers, as seen in its flat sales over the last two years
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
iHeartMedia is trading at $1.73 per share, or 0.4x forward EV-to-EBITDA. To fully understand why you should be careful with IHRT, check out our full research report (it’s free).
Funko (FNKO)
Rolling One-Year Beta: 1.54
Boasting partnerships with media franchises like Marvel and One Piece, Funko (NASDAQ: FNKO) is a company specializing in creating and distributing licensed pop culture collectibles.
Why Do We Think FNKO Will Underperform?
- Products and services have few die-hard fans as sales have declined by 10% annually over the last two years
- Earnings per share fell by 15% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $4.97 per share, Funko trades at 23.3x forward P/E. Dive into our free research report to see why there are better opportunities than FNKO.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. 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).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% 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
