A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. Keeping that in mind, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Nexstar Media (NXST)
Rolling One-Year Beta: 0.66
Founded in 1996, Nexstar (NASDAQ: NXST) is an American media company operating numerous local television stations and digital media outlets across the country.
Why Should You Sell NXST?
- Sales were flat over the last two years, indicating it's failed to expand its business
- Forecasted revenue decline of 7.3% for the upcoming 12 months implies demand will fall off a cliff
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 5.8 percentage points over the next year
Nexstar Media is trading at $174.42 per share, or 3.4x forward EV-to-EBITDA. To fully understand why you should be careful with NXST, check out our full research report (it’s free).
Driven Brands (DRVN)
Rolling One-Year Beta: 0.70
With approximately 5,000 locations across 49 U.S. states and 13 other countries, Driven Brands (NASDAQ: DRVN) operates a network of automotive service centers offering maintenance, car washes, paint, collision repair, and glass services across North America.
Why Are We Wary of DRVN?
- 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
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Driven Brands’s stock price of $17.41 implies a valuation ratio of 13.9x forward P/E. If you’re considering DRVN for your portfolio, see our FREE research report to learn more.
Allegion (ALLE)
Rolling One-Year Beta: 0.67
Allegion plc (NYSE: ALLE) is a provider of security products and solutions that keep people and assets safe and secure in various environments.
Why Does ALLE Fall Short?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.5 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $142.85 per share, Allegion trades at 18.2x forward P/E. Read our free research report to see why you should think twice about including ALLE in your portfolio.
High-Quality Stocks for All Market Conditions
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.
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