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 to steer clear of and a few better alternatives.
Driven Brands (DRVN)
Rolling One-Year Beta: 0.76
With approximately 5,000 locations across 49 U.S. states and 13 other countries, Driven Brands (NASDAQ: DRVN) operates a network of automotive service centers offering maintenance, car washes, paint, collision repair, and glass services across North America.
Why Does DRVN Give Us Pause?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $17.45 per share, Driven Brands trades at 13.5x forward P/E. If you’re considering DRVN for your portfolio, see our FREE research report to learn more.
GoodRx (GDRX)
Rolling One-Year Beta: 0.72
Started in 2011 to tackle the problem of high prescription drug costs in America, GoodRx (NASDAQ: GDRX) operates a digital platform that helps consumers find lower prices on prescription medications through price comparison tools and discount codes.
Why Should You Dump GDRX?
- Sales trends were unexciting over the last two years as its 3.3% annual growth was below the typical healthcare company
- Subscale operations are evident in its revenue base of $797.4 million, meaning it has fewer distribution channels than its larger rivals
- Negative returns on capital show that some of its growth strategies have backfired
GoodRx’s stock price of $4.80 implies a valuation ratio of 11.5x forward P/E. Check out our free in-depth research report to learn more about why GDRX doesn’t pass our bar.
Travelers (TRV)
Rolling One-Year Beta: 0.42
Tracing its roots back to 1853 when it insured travelers against accidents on steamboats and railroads, Travelers (NYSE: TRV) provides a wide range of commercial and personal property and casualty insurance products to businesses, government units, associations, and individuals.
Why Are We Wary of TRV?
- Operational productivity has decreased over the last two years as its combined ratio worsened by 1.3 percentage points
- Sizable asset base leads to capital growth challenges as its 4.5% annual book value per share increases over the last five years fell short of other insurance companies
Travelers is trading at $264.60 per share, or 1.9x forward P/B. To fully understand why you should be careful with TRV, check out our full research report (it’s free).
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 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-small-cap company Exlservice (+354% 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
