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 that don’t make the cut and some better opportunities instead.
Northrop Grumman (NOC)
Rolling One-Year Beta: 0.49
Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE:NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.
Why Is NOC Risky?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Free cash flow margin dropped by 6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Northrop Grumman is trading at $491.37 per share, or 17.2x forward P/E. Check out our free in-depth research report to learn more about why NOC doesn’t pass our bar.
Baxter (BAX)
Rolling One-Year Beta: 0.46
With a history dating back to 1931 and products used in over 100 countries, Baxter International (NYSE:BAX) provides essential healthcare products including dialysis therapies, IV solutions, infusion systems, surgical products, and patient monitoring technologies to hospitals and clinics worldwide.
Why Do We Steer Clear of BAX?
- Annual sales declines of 10.3% for the past two years show its products and services struggled to connect with the market during this cycle
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Sales were less profitable over the last five years as its earnings per share fell by 9.2% annually, worse than its revenue declines
At $31.15 per share, Baxter trades at 12.2x forward P/E. To fully understand why you should be careful with BAX, check out our full research report (it’s free).
SS&C (SSNC)
Rolling One-Year Beta: 0.76
Founded in 1986 as a bridge between technology and financial services, SS&C Technologies (NASDAQ:SSNC) provides software and software-enabled services that help financial firms and healthcare organizations automate complex business processes.
Why Are We Hesitant About SSNC?
- Sales trends were unexciting over the last five years as its 4.9% annual growth was below the typical business services company
- Free cash flow margin shrank by 3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- ROIC of 6.3% reflects management’s challenges in identifying attractive investment opportunities
SS&C’s stock price of $81.89 implies a valuation ratio of 13.5x forward P/E. If you’re considering SSNC for your portfolio, see our FREE research report to learn more.
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 Growth Stocks for this month. 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.