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Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are two volatile stocks that could reward patient investors and one that could just as easily collapse.
One Stock to Sell:
UiPath (PATH)
Rolling One-Year Beta: 1.47
Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE:PATH) makes software that helps companies automate repetitive computer tasks.
Why Are We Wary of PATH?
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Average billings growth of 5.7% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
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Estimated sales growth of 6.4% for the next 12 months implies demand will slow from its three-year trend
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Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
UiPath’s stock price of $12.51 implies a valuation ratio of 4.6x forward price-to-sales. Check out our free in-depth research report to learn more about why PATH doesn’t pass our bar.
Two Stocks to Watch:
Meta (META)
Rolling One-Year Beta: 1.32
Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ:META) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.
Why Will META Outperform?
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Customers are spending more money on its platform as its average revenue per user has increased by 13.3% annually over the last two years
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Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 59.9%, and its operating leverage amplified its profits over the last few years
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Robust free cash flow margin of 31.5% gives it many options for capital deployment
Meta is trading at $591.50 per share, or 13.4x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Dycom (DY)
Rolling One-Year Beta: 1.16
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.
Why Do We Like DY?
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Annual revenue growth of 11.1% over the last two years was superb and indicates its market share increased during this cycle
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Operating margin expanded by 5.1 percentage points over the last five years as it scaled and became more efficient
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Share buybacks catapulted its annual earnings per share growth to 29.2%, which outperformed its revenue gains over the last two years