Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here are three low-volatility stocks to avoid and some better opportunities instead.
Carlisle (CSL)
Rolling One-Year Beta: 0.62
Originally founded as Carlisle Tire and Rubber Company, Carlisle Companies (NYSE:CSL) is a multi-industry product manufacturer focusing on construction materials and weatherproofing technologies.
Why Are We Wary of CSL?
- 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
- Estimated sales growth of 6.3% for the next 12 months is soft and implies weaker demand
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 3.6% annually
At $320.32 per share, Carlisle trades at 14.2x forward P/E. To fully understand why you should be careful with CSL, check out our full research report (it’s free).
Luxfer (LXFR)
Rolling One-Year Beta: 0.89
With its magnesium alloys used in the construction of the famous Spirit of St. Louis aircraft, Luxfer (NYSE:LXFR) offers specialized materials, components, and gas containment devices to various industries.
Why Are We Cautious About LXFR?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.3% annually over the last two years
- Anticipated sales growth of 2.7% for the next year implies demand will be shaky
- Earnings per share have dipped by 2.1% annually over the past five years, which is concerning because stock prices follow EPS over the long term
Luxfer’s stock price of $17.25 implies a valuation ratio of 13.2x forward P/E. Read our free research report to see why you should think twice about including LXFR in your portfolio.
Fiserv (FISV)
Rolling One-Year Beta: 0.78
Powering over 1 billion accounts and processing more than 12,000 financial transactions per second globally, Fiserv (NASDAQ:FISV) provides payment processing and financial technology solutions that enable merchants, banks, and credit unions to accept payments and manage financial transactions.
Why Do We Steer Clear of FISV?
- The company has faced growth challenges as its 2.5% annual revenue increases over the last two years fell short of other financials companies
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 3.1% annually
- Underwhelming 9.9% return on equity reflects management’s difficulties in finding profitable growth opportunities
Fiserv is trading at $45.64 per share, or 6.3x forward P/E. If you’re considering FISV for your portfolio, see our FREE research report to learn more.
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