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.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are three volatile stocks to steer clear of and a few better alternatives.
PTC (PTC)
Rolling One-Year Beta: 1.08
Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ: PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.
Why Do We Think Twice About PTC?
- Muted 7.7% annual revenue growth over the last three years shows its demand lagged behind its software peers
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 4.8% underwhelmed
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
PTC’s stock price of $167.01 implies a valuation ratio of 7.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PTC.
Tapestry (TPR)
Rolling One-Year Beta: 1.20
Originally founded as Coach, Tapestry (NYSE: TPR) is an American fashion conglomerate with a portfolio of luxury brands offering high-quality accessories and fashion products.
Why Are We Hesitant About TPR?
- Muted 1.6% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Anticipated sales growth of 2.1% for the next year implies demand will be shaky
Tapestry is trading at $79.22 per share, or 15.4x forward P/E. Check out our free in-depth research report to learn more about why TPR doesn’t pass our bar.
Warner Bros. Discovery (WBD)
Rolling One-Year Beta: 1.38
Formed from the merger of WarnerMedia and Discovery, Warner Bros. Discovery (NASDAQ: WBD) is a multinational media and entertainment company, offering television networks, streaming services, and film and television production.
Why Do We Avoid WBD?
- Products and services aren't resonating with the market as its revenue declined by 4.9% annually over the last two years
- Earnings per share fell by 55.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $9.70 per share, Warner Bros. Discovery trades at 175.6x forward P/E. To fully understand why you should be careful with WBD, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
