Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.
Masco (MAS)
Rolling One-Year Beta: 0.94
Headquartered just outside of Detroit, MI, Masco (NYSE: MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.
Why Do We Avoid MAS?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Projected sales growth of 1.3% for the next 12 months suggests sluggish demand
- Waning returns on capital imply its previous profit engines are losing steam
At $72.99 per share, Masco trades at 19.7x forward P/E. Dive into our free research report to see why there are better opportunities than MAS.
LeMaitre (LMAT)
Rolling One-Year Beta: 0.72
Founded in 1983 and named after a pioneering vascular surgeon, LeMaitre Vascular (NASDAQGM:LMAT) develops and manufactures specialized medical devices used by vascular surgeons to treat peripheral vascular disease and other circulatory conditions.
Why Does LMAT Worry Us?
- Subscale operations are evident in its revenue base of $234.6 million, meaning it has fewer distribution channels than its larger rivals
- Efficiency has decreased over the last five years as its operating margin fell by 2.3 percentage points
- Free cash flow margin dropped by 4.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
LeMaitre’s stock price of $94 implies a valuation ratio of 40.3x forward P/E. Read our free research report to see why you should think twice about including LMAT in your portfolio.
New Mountain Finance (NMFC)
Rolling One-Year Beta: 0.44
Operating as a financial bridge for growing businesses that might be overlooked by traditional banks, New Mountain Finance (NASDAQ: NMFC) is a business development company that provides loans and debt financing to middle-market companies in defensive growth industries.
Why Is NMFC Risky?
- Sales trends were unexciting over the last two years as its 2.3% annual growth was below the typical financials company
- Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
New Mountain Finance is trading at $9.94 per share, or 7.8x forward P/E. Check out our free in-depth research report to learn more about why NMFC doesn’t pass our bar.
Stocks We Like More
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