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. Keeping that in mind, here are three volatile stocks to avoid and some better opportunities instead.
Portillo's (PTLO)
Rolling One-Year Beta: 1.07
Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ:PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.
Why Should You Dump PTLO?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Low free cash flow margin of -0.9% declined over the last year as its investments ramped, giving it little breathing room
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Portillo's is trading at $4.73 per share, or 24.6x forward P/E. If you’re considering PTLO for your portfolio, see our FREE research report to learn more.
CTS (CTS)
Rolling One-Year Beta: 1.45
With roots dating back to 1896 and a global manufacturing footprint, CTS (NYSE:CTS) designs and manufactures sensors, connectivity components, and actuators for aerospace, defense, industrial, medical, and transportation markets.
Why Is CTS Not Exciting?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.3% annually over the last two years
- Earnings per share have dipped by 3.5% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $44.47 per share, CTS trades at 19.3x forward P/E. Read our free research report to see why you should think twice about including CTS in your portfolio.
ScanSource (SCSC)
Rolling One-Year Beta: 1.27
Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ:SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers.
Why Do We Think SCSC Will Underperform?
- Sales tumbled by 11.1% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 3.8% annually
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
ScanSource’s stock price of $41.92 implies a valuation ratio of 10x forward P/E. Dive into our free research report to see why there are better opportunities than SCSC.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our 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 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-micro-cap company Tecnoglass (+1,754% 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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