Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
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.
Transcat (TRNS)
Rolling One-Year Beta: 0.84
Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ: TRNS) provides measurement instruments and supplies.
Why Are We Hesitant About TRNS?
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 1.7 percentage points
- ROIC of 8.7% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Transcat is trading at $72.23 per share, or 35.8x forward P/E. Dive into our free research report to see why there are better opportunities than TRNS.
Greenbrier (GBX)
Rolling One-Year Beta: 0.86
Having designed the industry’s first double-decker railcar in the 1980s, Greenbrier (NYSE: GBX) supplies the freight rail transportation industry with railcars and related services.
Why Do We Think Twice About GBX?
- Annual sales declines of 4.5% for the past two years show its products and services struggled to connect with the market during this cycle
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 13.5%
- Negative free cash flow raises questions about the return timeline for its investments
At $46.03 per share, Greenbrier trades at 4.8x forward EV-to-EBITDA. To fully understand why you should be careful with GBX, check out our full research report (it’s free for active Edge members).
Penumbra (PEN)
Rolling One-Year Beta: 0.11
Founded in 2004 to address challenging medical conditions with significant unmet needs, Penumbra (NYSE: PEN) develops and manufactures innovative medical devices for treating vascular diseases and providing immersive healthcare rehabilitation solutions.
Why Does PEN Fall Short?
- Subscale operations are evident in its revenue base of $1.28 billion, meaning it has fewer distribution channels than its larger rivals
- Low free cash flow margin of 4% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Penumbra’s stock price of $256.06 implies a valuation ratio of 59.4x forward P/E. If you’re considering PEN for your portfolio, see our FREE research report to learn more.
Stocks We Like More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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
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