Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here is one low-volatility stock providing safe-and-steady growth and two that may not deliver the returns you need.
Two Stocks to Sell:
Strategic Education (STRA)
Rolling One-Year Beta: 0.77
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ: STRA) is a career-focused higher education provider.
Why Do We Avoid STRA?
- Demand for its offerings was relatively low as its number of domestic students has underwhelmed
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 6.6% annually while its revenue grew
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $86.57 per share, Strategic Education trades at 15.2x forward P/E. To fully understand why you should be careful with STRA, check out our full research report (it’s free).
Rocket Companies (RKT)
Rolling One-Year Beta: -0.47
Born in Detroit during the 1980s and evolving into a tech-driven financial powerhouse, Rocket Companies (NYSE: RKT) is a fintech company that provides digital mortgage lending, real estate services, and personal finance solutions through its technology platform.
Why Are We Wary of RKT?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 4% annually over the last five years
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
- High net-debt-to-EBITDA ratio of 12× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Rocket Companies’s stock price of $14.90 implies a valuation ratio of 3.3x forward P/B. Read our free research report to see why you should think twice about including RKT in your portfolio.
One Stock to Watch:
Yelp (YELP)
Rolling One-Year Beta: 0.39
Founded by PayPal alumni Jeremy Stoppelman and Russel Simmons, Yelp (NYSE: YELP) is an online platform that helps people discover local businesses through crowd-sourced reviews.
Why Could YELP Be a Winner?
- Superior platform functionality and low servicing costs result in a best-in-class gross margin of 91.2%
- Excellent EBITDA margin of 25.7% highlights the efficiency of its business model, and its profits increased over the last few years as it scaled
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy
Yelp is trading at $36.12 per share, or 6.4x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. 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
