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.
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 best left to the gamblers and some better opportunities instead.
Camping World (CWH)
Rolling One-Year Beta: 2.11
Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE: CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Why Does CWH Worry Us?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Camping World’s stock price of $14.12 implies a valuation ratio of 16.2x forward P/E. Read our free research report to see why you should think twice about including CWH in your portfolio.
Newmark (NMRK)
Rolling One-Year Beta: 1.35
Founded in 1929, Newmark (NASDAQ: NMRK) provides commercial real estate services, including leasing advisory, global corporate services, investment sales and capital markets, property and facilities management, valuation and advisory, and consulting.
Why Should You Dump NMRK?
- Muted 7.4% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Low free cash flow margin of 0% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- ROIC of 2.6% reflects management’s challenges in identifying attractive investment opportunities
Newmark is trading at $17.23 per share, or 10.2x forward P/E. Check out our free in-depth research report to learn more about why NMRK doesn’t pass our bar.
3M (MMM)
Rolling One-Year Beta: 1.23
Producers of the first asthma inhaler, 3M Company (NYSE: MMM) is a global conglomerate known for products in industries like healthcare, safety, electronics, and consumer goods.
Why Do We Steer Clear of MMM?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings per share have dipped by 2.2% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $150 per share, 3M trades at 18.1x forward P/E. If you’re considering MMM for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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