Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. Keeping that in mind, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Bright Horizons (BFAM)
Rolling One-Year Beta: 0.38
Founded in 1986, Bright Horizons (NYSE: BFAM) is a global provider of child care, early education, and workforce support solutions.
Why Do We Avoid BFAM?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Bright Horizons is trading at $122.32 per share, or 29.4x forward P/E. Read our free research report to see why you should think twice about including BFAM in your portfolio.
General Motors (GM)
Rolling One-Year Beta: 0.78
Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Is GM Not Exciting?
- Disappointing unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Estimated sales decline of 6.2% for the next 12 months implies a challenging demand environment
- Gross margin of 12.5% is below its competitors, leaving less money to invest in areas like marketing and R&D
General Motors’s stock price of $49.68 implies a valuation ratio of 4.6x forward P/E. Check out our free in-depth research report to learn more about why GM doesn’t pass our bar.
Select Medical (SEM)
Rolling One-Year Beta: 0.64
With a nationwide network spanning 46 states and over 2,700 healthcare facilities, Select Medical (NYSE: SEM) operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers across the United States.
Why Is SEM Risky?
- Declining admissions over the past two years indicate demand is soft and that the company may need to revise its strategy
- Projected sales decline of 11.6% over the next 12 months indicates demand will continue deteriorating
- Free cash flow margin dropped by 13.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $15.23 per share, Select Medical trades at 13x forward P/E. To fully understand why you should be careful with SEM, check out our full research report (it’s free).
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.
