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.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. That said, here are three low-volatility stocks to avoid and some better opportunities instead.
Ruger (RGR)
Rolling One-Year Beta: 0.07
Founded in 1949, Ruger (NYSE: RGR) is an American manufacturer of firearms for the commercial sporting market.
Why Do We Think RGR Will Underperform?
- Annual sales declines of 3.9% for the past two years show its products and services struggled to connect with the market
- Earnings per share have dipped by 26.8% annually over the past four years, which is concerning because stock prices follow EPS over the long term
- Eroding returns on capital suggest its historical profit centers are aging
Ruger is trading at $35.79 per share, or 11.1x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including RGR in your portfolio.
Whirlpool (WHR)
Rolling One-Year Beta: 0.67
Credited with introducing the first automatic washing machine, Whirlpool (NYSE: WHR) is a manufacturer of a variety of home appliances.
Why Should You Dump WHR?
- Disappointing unit sales over the past two years imply it may need to invest in improvements to get back on track
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- High net-debt-to-EBITDA ratio of 9× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $81.48 per share, Whirlpool trades at 8.7x forward P/E. Dive into our free research report to see why there are better opportunities than WHR.
LGI Homes (LGIH)
Rolling One-Year Beta: 0.74
Based in Texas, LGI Homes (NASDAQ: LGIH) is a homebuilding company specializing in constructing affordable, entry-level single-family homes in desirable communities across the United States.
Why Are We Out on LGIH?
- Average backlog growth of 4.9% over the past two years was mediocre and suggests fewer customers signed long-term contracts
- Diminishing returns on capital suggest its earlier profit pools are drying up
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
LGI Homes’s stock price of $49.80 implies a valuation ratio of 6.4x forward P/E. Check out our free in-depth research report to learn more about why LGIH doesn’t pass our bar.
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 6 Stocks for this week. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
