Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.
Lithia (LAD)
Rolling One-Year Beta: 0.93
With a strong presence in the Western US, Lithia Motors (NYSE:LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers.
Why Does LAD Give Us Pause?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 15.6%
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Lithia’s stock price of $328.42 implies a valuation ratio of 8.9x forward P/E. If you’re considering LAD for your portfolio, see our FREE research report to learn more.
McCormick (MKC)
Rolling One-Year Beta: 0.40
The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE:MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.
Why Is MKC Not Exciting?
- Sales trends were unexciting over the last three years as its 2.1% annual growth was below the typical consumer staples company
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 1.9 percentage points
McCormick is trading at $63.32 per share, or 20.3x forward P/E. Read our free research report to see why you should think twice about including MKC in your portfolio.
Vulcan Materials (VMC)
Rolling One-Year Beta: 0.72
Founded in 1909, Vulcan Materials (NYSE:VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.
Why Are We Hesitant About VMC?
- Sluggish trends in its tons shipped suggest customers aren’t adopting its solutions as quickly as the company hoped
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4%
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 25.2%
At $294.73 per share, Vulcan Materials trades at 31.2x forward P/E. Check out our free in-depth research report to learn more about why VMC doesn’t pass our bar.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% 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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