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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 that don’t make the cut and some better opportunities instead.
Marqeta (MQ)
Rolling One-Year Beta: 0.14
Founded by CEO Jason Gardner in 2009, Marqeta (NASDAQ:MQ) is an innovative card issuer that provides companies with the ability to issue and process virtual, physical, and tokenized credit and debit cards.
Why Are We Cautious About MQ?
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Software offerings aren’t resonating in this new AI paradigm as its revenue declined by 2.8% annually over the last three years
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Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 69.4%
Marqeta’s stock price of $4.75 implies a valuation ratio of 3.8x forward price-to-sales. If you’re considering MQ for your portfolio, see our FREE research report to learn more.
Skechers (SKX)
Rolling One-Year Beta: 0.81
Synonymous with "dad shoe", Skechers (NYSE:SKX) is a footwear company renowned for its comfortable, stylish, and affordable shoes for all ages.
Why Do We Avoid SKX?
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Weak constant currency growth over the past two years indicates challenges in maintaining its market share
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Estimated sales growth of 7.3% for the next 12 months implies demand will slow from its two-year trend
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Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 4.4% for the last two years
Skechers is trading at $61.43 per share, or 14.4x forward P/E. To fully understand why you should be careful with SKX, check out our full research report (it’s free).
Mercury Systems (MRCY)
Rolling One-Year Beta: 0.85
Founded in 1981, Mercury Systems (NASDAQ:MRCY) specializes in providing processing subsystems and components for primarily defense applications.
Why Should You Dump MRCY?
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Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
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Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 28% annually
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Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $46.34 per share, Mercury Systems trades at 66x forward P/E. Check out our free in-depth research report to learn more about why MRCY doesn’t pass our bar.