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 providing safe-and-steady growth and two that may not deliver the returns you need.
Two Stocks to Sell:
Dine Brands (DIN)
Rolling One-Year Beta: 0.76
Operating a franchise model, Dine Brands (NYSE: DIN) is a casual restaurant chain that owns the Applebee’s and IHOP banners.
Why Are We Cautious About DIN?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 5.1% annually, worse than its revenue
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Dine Brands is trading at $19.91 per share, or 3.5x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than DIN.
Coty (COTY)
Rolling One-Year Beta: 0.41
With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Does COTY Fall Short?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $5.13 per share, Coty trades at 8.7x forward price-to-earnings. Read our free research report to see why you should think twice about including COTY in your portfolio.
One Stock to Watch:
Electronic Arts (EA)
Rolling One-Year Beta: 0.31
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ: EA) is one of the world’s largest video game publishers.
Why Are We Fans of EA?
- Word-of-mouth marketing drives organic user growth, eliminating the need for costly advertising campaigns
- Healthy EBITDA margin of 36.2% shows it’s a well-run company with efficient processes
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Electronic Arts’s stock price of $145.03 implies a valuation ratio of 14.1x forward EV-to-EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
