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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.
Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. Keeping that in mind, here are three volatile stocks to steer clear of and a few better alternatives.
Five9 (FIVN)
Rolling One-Year Beta: 1.57
Started in 2001, Five9 (NASDAQ: FIVN) offers software-as-a-service that makes it easier for companies to set up and efficiently run call centers to offer more tailored customer support.
Why Do We Think Twice About FIVN?
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Annual revenue growth of 18% over the last three years was below our standards for the software sector
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Estimated sales growth of 8.4% for the next 12 months implies demand will slow from its three-year trend
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Gross margin of 54.7% is way below its competitors, leaving less money to invest in areas like marketing and R&D
Five9 is trading at $28 per share, or 2.2x forward price-to-sales. Read our free research report to see why you should think twice about including FIVN in your portfolio, it’s free.
Wix (WIX)
Rolling One-Year Beta: 1.42
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy to operate website building platform.
Why Are We Wary of WIX?
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11.5% annual revenue growth over the last three years was slower than its software peers
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High servicing costs result in a relatively inferior gross margin of 67.9% that must be offset through increased usage
At $189.59 per share, Wix trades at 5.8x forward price-to-sales. To fully understand why you should be careful with WIX, check out our full research report (it’s free).
America's Car-Mart (CRMT)
Rolling One-Year Beta: 1.41
With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers.
Why Is CRMT Risky?
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Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
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Gross margin of 20.2% is below its competitors, leaving less money for marketing and promotions
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Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
America's Car-Mart’s stock price of $52.25 implies a valuation ratio of 16.6x forward P/E. Check out our free in-depth research report to learn more about why CRMT doesn’t pass our bar.
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.