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.
Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. Keeping that in mind, here are three volatile stocks to avoid and some better opportunities instead.
Udemy (UDMY)
Rolling One-Year Beta: 1.38
With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ:UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.
Why Are We Hesitant About UDMY?
- Preference for prioritizing user growth over monetization has led to 1.6% annual drops in its average revenue per buyer
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- Highly competitive market means it’s on the never-ending treadmill of sales and marketing spend
At $6.99 per share, Udemy trades at 11.2x forward EV/EBITDA. Check out our free in-depth research report to learn more about why UDMY doesn’t pass our bar.
Victoria's Secret (VSCO)
Rolling One-Year Beta: 2.00
Spun off from L Brands in 2020, Victoria’s Secret (NYSE:VSCO) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances.
Why Do We Pass on VSCO?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Operating margin of 4.4% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Earnings per share have contracted by 25.8% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
Victoria's Secret is trading at $19.87 per share, or 9.3x forward P/E. Dive into our free research report to see why there are better opportunities than VSCO.
Kimball Electronics (KE)
Rolling One-Year Beta: 1.38
Founded in 1961, Kimball Electronics (NYSE:KE) is a global contract manufacturer specializing in electronics and manufacturing solutions for automotive, medical, and industrial markets.
Why Should You Dump KE?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 5% annually over the last two years
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
- Low free cash flow margin of -0.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Kimball Electronics’s stock price of $20.18 implies a valuation ratio of 18.8x forward P/E. To fully understand why you should be careful with KE, check out our full research report (it’s free).
Stocks We Like More
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.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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