Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. That said, here are three low-volatility stocks to avoid and some better opportunities instead.
Lamb Weston (LW)
Rolling One-Year Beta: 0.21
Best known for its Grown in Idaho brand, Lamb Weston (NYSE:LW) produces and distributes potato products such as frozen french fries and mashed potatoes.
Why Do We Think Twice About LW?
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 5 percentage points
- Low free cash flow margin for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $50.56 per share, Lamb Weston trades at 14.7x forward P/E. Read our free research report to see why you should think twice about including LW in your portfolio.
Paramount (PARA)
Rolling One-Year Beta: 0.41
Owner of Spongebob Squarepants and formerly known as ViacomCBS, Paramount Global (NASDAQ:PARA) is a major media conglomerate offering television, film production, and digital content across various global platforms.
Why Should You Sell PARA?
- Annual revenue declines of 2.3% over the last two years indicate problems with its market positioning
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 22.1% annually while its revenue grew
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Paramount’s stock price of $11.99 implies a valuation ratio of 8x forward P/E. Dive into our free research report to see why there are better opportunities than PARA.
Organon (OGN)
Rolling One-Year Beta: 0.15
Spun off from Merck in 2021 to create a company dedicated to addressing unmet needs in women's health, Organon (NYSE:OGN) is a global healthcare company focused on improving women's health through prescription therapies, medical devices, biosimilars, and established medicines.
Why Do We Avoid OGN?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.8% annually over the last five years
- Earnings per share have contracted by 18% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 28.9 percentage points
Organon is trading at $8.65 per share, or 2.2x forward P/E. To fully understand why you should be careful with OGN, check out our full research report (it’s free).
Stocks We Like More
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 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.