Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. Keeping that in mind, here are three volatile stocks best left to the gamblers and some better opportunities instead.
BigCommerce (BIGC)
Rolling One-Year Beta: 2.11
Founded in Sydney, Australia in 2009 by Mitchell Harper and Eddie Machaalani, BigCommerce (NASDAQ: BIGC) provides software for businesses to easily create online stores.
Why Are We Cautious About BIGC?
- Average ARR growth of 5.1% over the last year has disappointed, suggesting it’s had a hard time winning long-term deals and renewals
- Estimated sales growth of 3.5% for the next 12 months implies demand will slow from its three-year trend
- Suboptimal cost structure is highlighted by its history of operating losses
BigCommerce is trading at $5.15 per share, or 1.2x forward price-to-sales. To fully understand why you should be careful with BIGC, check out our full research report (it’s free).
Foot Locker (FL)
Rolling One-Year Beta: 1.21
Known for store associates whose uniforms resemble those of referees, Foot Locker (NYSE: FL) is a specialty retailer that sells athletic footwear, clothing, and accessories.
Why Are We Out on FL?
- Ongoing store closures and lackluster same-store sales indicate sluggish demand and a focus on consolidation
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $12.86 per share, Foot Locker trades at 7.5x forward P/E. If you’re considering FL for your portfolio, see our FREE research report to learn more.
American Eagle (AEO)
Rolling One-Year Beta: 1.18
With a heavy focus on denim, American Eagle Outfitters (NYSE: AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults.
Why Does AEO Give Us Pause?
- Annual revenue growth of 4.3% over the last five years was below our standards for the consumer retail sector
- Forecasted revenue decline of 2.7% for the upcoming 12 months implies demand will fall off a cliff
- Underwhelming 2.6% return on capital reflects management’s difficulties in finding profitable growth opportunities
American Eagle’s stock price of $11.08 implies a valuation ratio of 6.3x forward P/E. Check out our free in-depth research report to learn more about why AEO doesn’t pass our bar.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. 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.
