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 steer clear of and a few better alternatives.
NXP Semiconductors (NXPI)
Rolling One-Year Beta: 1.36
Spun off from Dutch electronics giant Philips in 2006, NXP Semiconductors (NASDAQ: NXPI) is a designer and manufacturer of chips used in autos, industrial manufacturing, mobile devices, and communications infrastructure.
Why Does NXPI Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.3% annually over the last two years
- Projected sales decline of 1.6% over the next 12 months indicates demand will continue deteriorating
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 10.1 percentage points
NXP Semiconductors is trading at $188.39 per share, or 15.4x forward P/E. Check out our free in-depth research report to learn more about why NXPI doesn’t pass our bar.
Norwegian Cruise Line (NCLH)
Rolling One-Year Beta: 1.60
With amenities like a full go-kart race track built into its ships, Norwegian Cruise Line (NYSE: NCLH) is a premier global cruise company.
Why Does NCLH Give Us Pause?
- Performance surrounding its passenger cruise days has lagged its peers
- Negative free cash flow raises questions about the return timeline for its investments
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Norwegian Cruise Line’s stock price of $17.40 implies a valuation ratio of 8.2x forward P/E. If you’re considering NCLH for your portfolio, see our FREE research report to learn more.
Herc (HRI)
Rolling One-Year Beta: 1.42
Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE: HRI) provides equipment rental and related services to a wide range of industries.
Why Are We Hesitant About HRI?
- Estimated sales growth of 2.2% for the next 12 months implies demand will slow from its two-year trend
- Flat earnings per share over the last two years lagged its peers
- 18 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
At $116.20 per share, Herc trades at 9x forward P/E. Read our free research report to see why you should think twice about including HRI in your portfolio.
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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
