A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. Keeping that in mind, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Arcos Dorados (ARCO)
Rolling One-Year Beta: 0.18
Translating to “Golden Arches” in Spanish, Arcos Dorados (NYSE:ARCO) is the master franchisee of the McDonald's brand in Latin America and the Caribbean, responsible for its operations and growth in over 20 countries.
Why Are We Cautious About ARCO?
- Gross margin of 13.2% is below its competitors, leaving less money for marketing and promotions
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of -0.9% for the last two years
At $7.56 per share, Arcos Dorados trades at 0.3x forward price-to-sales. Check out our free in-depth research report to learn more about why ARCO doesn’t pass our bar.
Clarus (CLAR)
Rolling One-Year Beta: 0.68
Initially a financial services business, Clarus (NASDAQ:CLAR) designs, manufactures, and distributes outdoor equipment and lifestyle products.
Why Should You Dump CLAR?
- Annual revenue declines of 17.4% over the last two years indicate problems with its market positioning
- Earnings per share fell by 16.5% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Clarus is trading at $3.55 per share, or 9.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than CLAR.
AECOM (ACM)
Rolling One-Year Beta: 0.61
Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.
Why Is ACM Not Exciting?
- Backlog has dropped by 1.6% on average over the past two years, suggesting it’s losing orders as competition picks up
- Gross margin of 6.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Operating margin of 4.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
AECOM’s stock price of $111.99 implies a valuation ratio of 21.8x forward P/E. Check out our free in-depth research report to learn more about why ACM doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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 5 Growth Stocks for this month. 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