Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. That said, here are three low-volatility stocks to avoid and some better opportunities instead.
Boise Cascade (BCC)
Rolling One-Year Beta: 0.73
Formed through the merger of two lumber companies, Boise Cascade Company (NYSE: BCC) manufactures and distributes wood products and other building materials.
Why Do We Steer Clear of BCC?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.3% annually over the last two years
- Free cash flow margin shrank by 6.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Diminishing returns on capital suggest its earlier profit pools are drying up
Boise Cascade’s stock price of $80.79 implies a valuation ratio of 25.5x forward P/E. To fully understand why you should be careful with BCC, check out our full research report (it’s free).
Hamilton Insurance Group (HG)
Rolling One-Year Beta: 0.31
Founded in 2013 and operating through three distinct underwriting platforms across four countries, Hamilton Insurance Group (NYSE: HG) operates global specialty insurance and reinsurance platforms across Lloyd's, Ireland, Bermuda, and the United States.
Why Are We Wary of HG?
- Forecasted revenue decline of 2% for the upcoming 12 months implies demand will fall off a cliff
- Expenses have increased as a percentage of revenue over the last two years as its combined ratio degraded by 5.9 percentage points
- Earnings per share have dipped by 56.9% annually over the past one years, which is concerning because stock prices follow EPS over the long term
Hamilton Insurance Group is trading at $27.28 per share, or 1x forward P/B. Check out our free in-depth research report to learn more about why HG doesn’t pass our bar.
Hercules Capital (HTGC)
Rolling One-Year Beta: 0.80
Named after the mythological hero known for his strength, Hercules Capital (NYSE: HTGC) is a business development company that provides debt financing to venture capital-backed and growth-stage technology and life sciences companies.
Why Does HTGC Fall Short?
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 1.8% annually
At $18.64 per share, Hercules Capital trades at 9.3x forward P/E. If you’re considering HTGC for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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