Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
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 to steer clear of and a few better alternatives.
Redfin (RDFN)
Rolling One-Year Beta: 0.81
Founded by a former medical school student, electrical engineer, and Amazon data engineer, Redfin (NASDAQ: RDFN) is a real estate company offering brokerage services through an online platform.
Why Are We Out on RDFN?
- Demand for its offerings was relatively low as its number of partner transactions has underwhelmed
- Earnings per share fell by 14.5% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly
Redfin is trading at $9.87 per share, or 75.6x forward EV-to-EBITDA. To fully understand why you should be careful with RDFN, check out our full research report (it’s free).
ADT (ADT)
Rolling One-Year Beta: 0.59
Founded in 1874 and headquartered in Boca Raton, Florida, ADT (NYSE: ADT) is a provider of security, automation, and smart home solutions, offering comprehensive services for home and business protection.
Why Are We Wary of ADT?
- Demand for its offerings was relatively low as its number of customers has underwhelmed
- Projected sales growth of 4.3% for the next 12 months suggests sluggish demand
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $8.51 per share, ADT trades at 9.9x forward P/E. Read our free research report to see why you should think twice about including ADT in your portfolio.
Middleby (MIDD)
Rolling One-Year Beta: 0.95
Holding a Guinness World Record for creating the world’s fastest conveyor pizza oven, Middleby (NYSE: MIDD) is a food service and equipment manufacturer.
Why Do We Steer Clear of MIDD?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Projected sales growth of 2.3% for the next 12 months suggests sluggish demand
- Earnings per share lagged its peers over the last two years as they only grew by 2.7% annually
Middleby’s stock price of $149.91 implies a valuation ratio of 15x forward P/E. Check out our free in-depth research report to learn more about why MIDD doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.
