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 are three low-volatility stocks to avoid and some better opportunities instead.
Kimberly-Clark (KMB)
Rolling One-Year Beta: 0.03
Originally founded as a Wisconsin paper mill in 1872, Kimberly-Clark (NYSE: KMB) is now a household products powerhouse known for personal care and tissue products.
Why Are We Hesitant About KMB?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Projected sales growth of 2.6% for the next 12 months suggests sluggish demand
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 2.6 percentage points
At $130.01 per share, Kimberly-Clark trades at 17.5x forward P/E. Check out our free in-depth research report to learn more about why KMB doesn’t pass our bar.
La-Z-Boy (LZB)
Rolling One-Year Beta: 0.81
The prized possession of every mancave, La-Z-Boy (NYSE: LZB) is a furniture company specializing in recliners, sofas, and seats.
Why Should You Dump LZB?
- Products and services have few die-hard fans as sales have declined by 2.8% annually over the last two years
- Anticipated sales growth of 1.9% for the next year implies demand will be shaky
- Waning returns on capital imply its previous profit engines are losing steam
La-Z-Boy is trading at $36.16 per share, or 11.2x forward P/E. To fully understand why you should be careful with LZB, check out our full research report (it’s free).
Merit Medical Systems (MMSI)
Rolling One-Year Beta: 0.66
Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ: MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.
Why Are We Cautious About MMSI?
- Modest revenue base of $1.43 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Underwhelming 4.5% return on capital reflects management’s difficulties in finding profitable growth opportunities
Merit Medical Systems’s stock price of $92.79 implies a valuation ratio of 26.9x forward P/E. If you’re considering MMSI for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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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 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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