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 avoid and some better opportunities instead.
ICF International (ICFI)
Rolling One-Year Beta: 0.45
Operating at the intersection of policy, technology, and implementation for over five decades, ICF International (NASDAQ:ICFI) provides professional consulting services and technology solutions to government agencies and commercial clients across energy, health, environment, and security sectors.
Why Do We Pass on ICFI?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 1.2% declines over the past two years
- Sales are projected to tank by 2.3% over the next 12 months as demand evaporates
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $97.77 per share, ICF International trades at 14.4x forward P/E. If you’re considering ICFI for your portfolio, see our FREE research report to learn more.
United Parcel Service (UPS)
Rolling One-Year Beta: 0.83
Trademarking its recognizable UPS Brown color, UPS (NYSE:UPS) offers package delivery, supply chain management, and freight forwarding services.
Why Do We Steer Clear of UPS?
- Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 18.4% annually, worse than its revenue
- Eroding returns on capital suggest its historical profit centers are aging
United Parcel Service’s stock price of $87.07 implies a valuation ratio of 11.8x forward P/E. To fully understand why you should be careful with UPS, check out our full research report (it’s free).
Brookline Bancorp (BRKL)
Rolling One-Year Beta: 0.91
Founded in 1871 and operating through three subsidiary banks across three states, Brookline Bancorp (NASDAQ:BRKL) is a multi-bank holding company that provides commercial, business, and retail banking services to small and mid-sized businesses and individuals in New England and New York.
Why Are We Wary of BRKL?
- 6.7% annual net interest income growth over the last five years was slower than its banking peers
- 27 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the firm’s willingness to accept lower profitability to defend its market position
- Performance over the past two years shows each sale was less profitable, as its earnings per share fell by 16.1% annually
Brookline Bancorp is trading at $10.60 per share, or 0.5x forward P/B. Read our free research report to see why you should think twice about including BRKL in your portfolio.
High-Quality Stocks for All Market Conditions
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