Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are three volatile stocks to avoid and some better opportunities instead.
MRC Global (MRC)
Rolling One-Year Beta: 1.56
Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE:MRC) offers pipes, valves, and fitting products for various industries.
Why Are We Out on MRC?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Issuance of new shares over the last two years caused its earnings per share to fall by 36.4% annually, even worse than its revenue declines
- Free cash flow margin dropped by 5.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $13.97 per share, MRC Global trades at 11.2x forward P/E. To fully understand why you should be careful with MRC, check out our full research report (it’s free).
Dover (DOV)
Rolling One-Year Beta: 1.23
A company that manufactured critical equipment for the United States military during World War II, Dover (NYSE:DOV) manufactures engineered components and specialized equipment for numerous industries.
Why Do We Avoid DOV?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 3.2% annually
- Eroding returns on capital suggest its historical profit centers are aging
Dover is trading at $176.45 per share, or 18x forward P/E. Dive into our free research report to see why there are better opportunities than DOV.
TransUnion (TRU)
Rolling One-Year Beta: 1.65
One of the three major credit bureaus in the United States alongside Equifax and Experian, TransUnion (NYSE:TRU) is a global information and insights company that provides credit reports, fraud prevention tools, and data analytics to help businesses make decisions and consumers manage their financial health.
Why Does TRU Worry Us?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 2.7 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.9 percentage points
- ROIC of 5.9% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
TransUnion’s stock price of $88.89 implies a valuation ratio of 20.2x forward P/E. Read our free research report to see why you should think twice about including TRU in your portfolio.
Stocks We Like More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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-micro-cap company Tecnoglass (+1,754% 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
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