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.

At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are three volatile stocks to avoid and some better opportunities instead.

Avis Budget Group (CAR)

Rolling One-Year Beta: 1.73

The parent company of brands such as Zipcar and Budget Truck Rental, Avis (NASDAQ:CAR) is a provider of car rental and mobility solutions.

Why Do We Pass on CAR?

1. Performance surrounding its available rental days - car rental has lagged its peers
2. Earnings per share have contracted by 73.4% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Avis Budget Group is trading at $94.59 per share, or 9.3x forward price-to-earnings. Read our free research report to see why you should think twice about including CAR in your portfolio, it’s free.

Simpson (SSD)

Rolling One-Year Beta: 1.11

Aiming to build safer and stronger buildings, Simpson (NYSE:SSD) designs and manufactures structural connectors, anchors, and other construction products.

Why Is SSD Not Exciting?

1. 2.7% annual revenue growth over the last two years was slower than its industrials peers
2. Free cash flow margin dropped by 5.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Eroding returns on capital suggest its historical profit centers are aging

Simpson’s stock price of $156.08 implies a valuation ratio of 18.8x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than SSD.

Chewy (CHWY)

Rolling One-Year Beta: 1.68

Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE:CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.

Why Are We Wary of CHWY?

1. Annual sales growth of 9.8% over the last three years lagged behind its consumer internet peers as its large revenue base made it difficult to generate incremental demand
2. Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its three-year trend
3. High servicing costs result in an inferior gross margin of 28.8% that must be offset through higher volumes

At $36.80 per share, Chewy trades at 23.2x forward EV-to-EBITDA. To fully understand why you should be careful with CHWY, check out our full research report (it’s free).

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.