Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.
Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. That said, here are three volatile stocks to steer clear of and a few better alternatives.
Penguin Solutions (PENG)
Rolling One-Year Beta: 1.98
Based in the US, Penguin Solutions (NASDAQ: PENG) is a diversified semiconductor company offering memory, digital, and LED products.
Why Do We Pass on PENG?
- Muted 3.7% annual revenue growth over the last five years shows its demand lagged behind its semiconductor peers
- Gross margin of 28.8% reflects its high production costs
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Penguin Solutions’s stock price of $18.76 implies a valuation ratio of 9.1x forward P/E. If you’re considering PENG for your portfolio, see our FREE research report to learn more.
Designer Brands (DBI)
Rolling One-Year Beta: 2.29
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE: DBI) is an American discount retailer focused on footwear and accessories.
Why Do We Steer Clear of DBI?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
- 11× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Designer Brands is trading at $7.41 per share, or 22.4x forward P/E. Read our free research report to see why you should think twice about including DBI in your portfolio.
Frontdoor (FTDR)
Rolling One-Year Beta: 1.27
Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor (NASDAQ: FTDR) is a provider of home warranty and service plans.
Why Is FTDR Risky?
- 7.1% annual revenue growth over the last five years was slower than its consumer discretionary peers
- Operating margin of 18.9% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Forecasted free cash flow margin suggests the company will fail to improve its cash conversion over the next year
At $54.05 per share, Frontdoor trades at 13.2x forward P/E. If you’re considering FTDR for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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