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 are two volatile stocks that could reward patient investors and one best left to the gamblers.
One Stock to Sell:
Potbelly (PBPB)
Rolling One-Year Beta: 1.43
With a unique origin story where the company actually started as an antique shop, Potbelly (NASDAQ: PBPB) today is a chain known for its toasty sandwiches.
Why Should You Sell PBPB?
- Lackluster 1.8% annual revenue growth over the last six years indicates the company is losing ground to competitors
- Revenue base of $465.1 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
Potbelly’s stock price of $12.68 implies a valuation ratio of 13x forward EV-to-EBITDA. To fully understand why you should be careful with PBPB, check out our full research report (it’s free).
Two Stocks to Watch:
Arlo Technologies (ARLO)
Rolling One-Year Beta: 1.79
Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE: ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.
Why Do We Watch ARLO?
- Operating margin profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 193% outpaced its revenue gains
- Free cash flow margin grew by 19.7 percentage points over the last five years, giving the company more chips to play with
Arlo Technologies is trading at $17.60 per share, or 27.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Magnite (MGNI)
Rolling One-Year Beta: 1.62
Born from the 2020 merger of Rubicon Project and Telaria, Magnite (NASDAQ: MGNI) operates the world's largest independent sell-side advertising platform that automates the buying and selling of digital advertising inventory across all channels and formats.
Why Is MGNI a Top Pick?
- Annual revenue growth of 33.3% over the last five years was superb and indicates its market share increased during this cycle
- Robust free cash flow margin of 23.6% gives it many options for capital deployment, and its recently improved profitability means it has even more resources to invest or distribute
- Historical investments are beginning to pay off as its returns on capital are growing
At $24.49 per share, Magnite trades at 27.5x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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 183% over the last five years (as of March 31st 2025).
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-small-cap company Comfort Systems (+782% 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
