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. That said, here are three volatile stocks best left to the gamblers and some better opportunities instead.
Textron (TXT)
Rolling One-Year Beta: 1.20
Listed on the NYSE in 1947, Textron (NYSE:TXT) provides products and services in the aerospace, defense, industrial, and finance sectors.
Why Is TXT Not Exciting?
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Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
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Anticipated sales growth of 6.7% for the next year implies demand will be shaky
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Free cash flow margin dropped by 5.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $81.18 per share, Textron trades at 12.8x forward P/E. To fully understand why you should be careful with TXT, check out our full research report (it’s free).
Vestis (VSTS)
Rolling One-Year Beta: 1.35
Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE:VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.
Why Is VSTS Risky?
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Sales were flat over the last two years, indicating it’s failed to expand this cycle
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Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
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Capital intensity has ramped up over the last four years as its free cash flow margin decreased by 6 percentage points
Vestis is trading at $6.11 per share, or 7.7x forward P/E. If you’re considering VSTS for your portfolio, see our FREE research report to learn more.
Emerson Electric (EMR)
Rolling One-Year Beta: 1.38
Founded in 1890, Emerson Electric (NYSE:EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.
Why Are We Wary of EMR?
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Sales stagnated over the last five years and signal the need for new growth strategies
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4.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
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Diminishing returns on capital suggest its earlier profit pools are drying up
Emerson Electric’s stock price of $133.30 implies a valuation ratio of 21.6x forward P/E. Check out our free in-depth research report to learn more about why EMR doesn’t pass our bar.
Story continuesStocks We Like More
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