A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren’t prepared.
These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. That said, here are three volatile stocks to avoid and some better opportunities instead.
Park-Ohio (PKOH)
Rolling One-Year Beta: 1.21
Based in Cleveland, Park-Ohio (NASDAQ: PKOH) provides supply chain management services, capital equipment, and manufactured components.
Why Is PKOH Risky?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Gross margin of 15.1% is below its competitors, leaving less money to invest in areas like marketing and R&D
- 5.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $17.82 per share, Park-Ohio trades at 5.6x forward P/E. Check out our free in-depth research report to learn more about why PKOH doesn’t pass our bar.
Universal Logistics (ULH)
Rolling One-Year Beta: 1.16
Founded in 1932, Universal Logistics (NASDAQ: ULH) is a provider of customized transportation and logistics solutions operating throughout the United States and in Mexico, Canada, and Colombia.
Why Should You Sell ULH?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5.1% annually over the last two years
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Free cash flow margin shrank by 9.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Universal Logistics’s stock price of $25.51 implies a valuation ratio of 8x forward P/E. Read our free research report to see why you should think twice about including ULH in your portfolio.
Ziff Davis (ZD)
Rolling One-Year Beta: 1.35
Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ: ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.
Why Do We Pass on ZD?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Sales over the last five years were less profitable as its earnings per share fell by 1.6% annually while its revenue was flat
- Free cash flow margin dropped by 17.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Ziff Davis is trading at $31.62 per share, or 4.5x forward P/E. If you’re considering ZD for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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