Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
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 avoid and some better opportunities instead.
Scholastic (SCHL)
Rolling One-Year Beta: 1.79
Creator of the legendary Scholastic Book Fair, Scholastic (NASDAQ:SCHL) is an international company specializing in children's publishing, education, and media services.
Why Are We Wary of SCHL?
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Products and services fail to spark excitement with consumers, as seen in its flat sales over the last five years
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Operating margin of 3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
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Low returns on capital reflect management’s struggle to allocate funds effectively
Scholastic is trading at $21.26 per share, or 12.4x forward P/E. Check out our free in-depth research report to learn more about why SCHL doesn’t pass our bar.
Moog (MOG.A)
Rolling One-Year Beta: 1.16
Responsible for the flight control actuation system integrated in the B-2 stealth bomber, Moog (NYSE:MOG.A) provides precision motion control solutions used in aerospace and defense applications
Why Does MOG.A Worry Us?
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Muted 4.2% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
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Estimated sales growth of 1.7% for the next 12 months implies demand will slow from its two-year trend
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Free cash flow margin shrank by 12.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Moog’s stock price of $183.77 implies a valuation ratio of 20.8x forward P/E. Dive into our free research report to see why there are better opportunities than MOG.A.
Proto Labs (PRLB)
Rolling One-Year Beta: 1.35
Pioneering the concept of online quoting and manufacturing for custom prototypes and low-volume production parts, Proto Labs (NYSE:PRLB) offers injection molding, 3D printing, and sheet metal fabrication for manufacturers in various industries.
Why Do We Avoid PRLB?
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Flat sales over the last two years suggest it must find different ways to grow during this cycle
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Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 7.3 percentage points
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Earnings per share have dipped by 10.5% annually over the past five years, which is concerning because stock prices follow EPS over the long term
At $39.84 per share, Proto Labs trades at 27x forward P/E. To fully understand why you should be careful with PRLB, 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
