Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. Keeping that in mind, here is one low-volatility stock that could offer consistent gains and two that may not keep up.
Two Stocks to Sell:
Array (ARRY)
Rolling One-Year Beta: 0.93
Going public in October 2020, Array (NASDAQ: ARRY) is a global manufacturer of ground-mounting tracking systems for utility and distributed generation solar energy projects.
Why Do We Think ARRY Will Underperform?
- Flat unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Cash-burning history makes us doubt the long-term viability of its business model
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Array’s stock price of $7.75 implies a valuation ratio of 12.1x forward P/E. Check out our free in-depth research report to learn more about why ARRY doesn’t pass our bar.
Cogent (CCOI)
Rolling One-Year Beta: 0.42
Operating a massive network spanning 20,000 miles of fiber optic cable and connecting to over 3,200 buildings worldwide, Cogent Communications (NASDAQ: CCOI) provides high-speed Internet access, private network services, and data center colocation to businesses and bandwidth-intensive organizations across 54 countries.
Why Are We Wary of CCOI?
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 37.5 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $50.20 per share, Cogent trades at 6.9x forward EV-to-EBITDA. If you’re considering CCOI for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Copart (CPRT)
Rolling One-Year Beta: 0.90
Starting as a single salvage yard in California in 1982, Copart (NASDAQ: CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.
Why Is CPRT a Good Business?
- Annual revenue growth of 15.6% over the last five years was superb and indicates its market share increased during this cycle
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 19.6% annually, topping its revenue gains
- CPRT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its rising cash conversion increases its margin of safety
Copart is trading at $49.34 per share, or 28.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 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-micro-cap company Tecnoglass (+1,754% 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
