Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here is one volatile stock that could deliver huge gains and two that might not be worth the risk.
Two Stocks to Sell:
Columbus McKinnon (CMCO)
Rolling One-Year Beta: 1.32
With 19 different brands across the globe, Columbus McKinnon (NASDAQ: CMCO) offers material handling equipment for the construction, manufacturing, and transportation industries.
Why Do We Avoid CMCO?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Performance over the past two years shows each sale was less profitable, as its earnings per share fell by 11.3% annually
- Free cash flow margin shrank by 3.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Columbus McKinnon is trading at $14.46 per share, or 5.5x forward P/E. Read our free research report to see why you should think twice about including CMCO in your portfolio.
Lemonade (LMND)
Rolling One-Year Beta: 1.78
Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade (NYSE: LMND) is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.
Why Does LMND Worry Us?
- Annual earnings per share growth of 17.4% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- Products and services are facing significant credit quality challenges during this cycle as book value per share has declined by 7.2% annually over the last five years
- Negative return on equity shows management lost money while trying to expand the business
Lemonade’s stock price of $67.02 implies a valuation ratio of 10.4x forward P/B. Check out our free in-depth research report to learn more about why LMND doesn’t pass our bar.
One Stock to Watch:
Capital One (COF)
Rolling One-Year Beta: 1.62
Starting as a credit card company in 1988 before expanding into a full-service bank, Capital One (NYSE: COF) is a financial services company that offers credit cards, auto loans, banking services, and commercial lending to consumers and businesses.
Why Do We Like COF?
- Impressive 15% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Additional sales over the last five years increased its profitability as the 44.9% annual growth in its earnings per share outpaced its revenue
- Management team has demonstrated it can invest in profitable ventures through its 10.9% five-year return on equity
At $202.01 per share, Capital One trades at 10.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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