Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Luckily for you, StockStory helps you navigate which companies are truly worth holding. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.
Bumble (BMBL)
Rolling One-Year Beta: 0.63
Started by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ: BMBL) is a leading dating app built with women at the center.
Why Does BMBL Fall Short?
- Customer spending has dipped by 4.9% on average as it focused on growing its buyers
- Estimated sales decline of 11.1% for the next 12 months implies a challenging demand environment
- 4.4 percentage point decline in its free cash flow margin over the last few years reflects the company’s increased investments to defend its market position
At $5.20 per share, Bumble trades at 2.2x forward EV/EBITDA. Read our free research report to see why you should think twice about including BMBL in your portfolio.
Constellation Brands (STZ)
Rolling One-Year Beta: 0.43
With a presence in more than 100 countries, Constellation Brands (NYSE: STZ) is a globally renowned producer and marketer of beer, wine, and spirits.
Why Is STZ Not Exciting?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Sales are projected to tank by 7% over the next 12 months as demand evaporates
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 28.3 percentage points
Constellation Brands is trading at $163.20 per share, or 11.9x forward P/E. Dive into our free research report to see why there are better opportunities than STZ.
Unum Group (UNM)
Rolling One-Year Beta: 0.70
Tracing its roots back to 1848 when financial security for workers was virtually non-existent, Unum Group (NYSE: UNM) provides workplace financial protection benefits including disability, life, accident, critical illness, dental and vision insurance primarily through employers.
Why Are We Hesitant About UNM?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual net premiums earned increases of 3.1% for the last four years
- Anticipated sales growth of 2.6% for the next year implies demand will be shaky
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 11.5% annually
Unum Group’s stock price of $80.07 implies a valuation ratio of 1.2x forward P/B. To fully understand why you should be careful with UNM, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
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 9 Market-Beating Stocks. 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 Exlservice (+354% 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
