A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. That said, here are three low-volatility stocks to steer clear of and a few better alternatives.
eHealth (EHTH)
Rolling One-Year Beta: 0.66
Aiming to address a high-stakes and often confusing decision, eHealth (NASDAQ:EHTH) guides consumers through health insurance enrollment and related topics.
Why Are We Hesitant About EHTH?
- Value proposition isn’t resonating strongly as its estimated membership averaged 2.2% drops over the last two years
- Estimated sales decline of 2.5% for the next 12 months implies a challenging demand environment
- Negative free cash flow raises questions about the return timeline for its investments
At $4.31 per share, eHealth trades at 3.1x forward EV/EBITDA. Check out our free in-depth research report to learn more about why EHTH doesn’t pass our bar.
Figs (FIGS)
Rolling One-Year Beta: 0.80
Rising to fame via TikTok and founded in 2013 by Heather Hasson and Trina Spear, Figs (NYSE:FIGS) is a healthcare apparel company known for its stylish approach to medical attire and uniforms.
Why Should You Dump FIGS?
- Sluggish trends in its active customers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 3.9 percentage points over the next year
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Figs’s stock price of $6.90 implies a valuation ratio of 120.6x forward P/E. To fully understand why you should be careful with FIGS, check out our full research report (it’s free).
RTX (RTX)
Rolling One-Year Beta: 0.76
Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.
Why Is RTX Not Exciting?
- Estimated sales growth of 4.8% for the next 12 months implies demand will slow from its two-year trend
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 4.8% annually
- Low returns on capital reflect management’s struggle to allocate funds effectively
RTX is trading at $162.34 per share, or 26.1x forward P/E. Read our free research report to see why you should think twice about including RTX in your portfolio.
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. 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 Kadant (+351% 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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