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 that don’t make the cut and some better opportunities instead.
UFP Technologies (UFPT)
Rolling One-Year Beta: 0.92
With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ:UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.
Why Do We Think Twice About UFPT?
- Smaller revenue base of $598 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Estimated sales growth of 4.6% for the next 12 months implies demand will slow from its two-year trend
At $248.47 per share, UFP Technologies trades at 26.1x forward P/E. To fully understand why you should be careful with UFPT, check out our full research report (it’s free).
CME Group (CME)
Rolling One-Year Beta: 0.09
Born from the Chicago Mercantile Exchange founded in 1898 as a butter and egg trading venue, CME Group (NASDAQ:CME) operates the world's largest derivatives marketplace where traders can buy and sell futures and options contracts across interest rates, equities, currencies, commodities, and more.
Why Does CME Give Us Pause?
- 6% annual revenue growth over the last five years was slower than its financials peers
- Earnings per share lagged its peers over the last two years as they only grew by 9.6% annually
CME Group’s stock price of $301.12 implies a valuation ratio of 25.5x forward P/E. If you’re considering CME for your portfolio, see our FREE research report to learn more.
OFG Bancorp (OFG)
Rolling One-Year Beta: 0.73
Originally founded in 1964 as a federal savings and loan institution, OFG Bancorp (NYSE:OFG) provides banking and financial services including commercial and consumer lending, wealth management, insurance, and trust services primarily in Puerto Rico and the U.S. Virgin Islands.
Why Does OFG Worry Us?
- Annual net interest income growth of 8.3% over the last five years was below our standards for the banking sector
- Projected net interest income decline of 2.2% for the next 12 months points to a tough demand environment ahead
- 77.7 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the firm’s willingness to accept lower profitability to defend its market position
OFG Bancorp is trading at $42.03 per share, or 1.2x forward P/B. Check out our free in-depth research report to learn more about why OFG doesn’t pass our bar.
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