Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. That said, here are three low-volatility stocks that don’t make the cut and some better opportunities instead.
Paychex (PAYX)
Rolling One-Year Beta: 0.51
Once known as the go-to service for small business payroll needs, Paychex (NASDAQ:PAYX) provides payroll processing, HR services, employee benefits administration, and insurance solutions to small and medium-sized businesses.
Why Are We Wary of PAYX?
- Annual revenue growth of 6.7% over the last two years was well below our standards for the software sector
- Efficiency has decreased over the last year as its operating margin fell by 3.1 percentage points
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 5 percentage points over the next year
Paychex’s stock price of $112.34 implies a valuation ratio of 6.1x forward price-to-sales. If you’re considering PAYX for your portfolio, see our FREE research report to learn more.
Hologic (HOLX)
Rolling One-Year Beta: 0.07
As a pioneer in 3D mammography technology that has revolutionized breast cancer detection, Hologic (NASDAQ:HOLX) develops and manufactures diagnostic products, medical imaging systems, and surgical devices focused primarily on women's health and wellness.
Why Does HOLX Fall Short?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 20.7 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Hologic is trading at $74.19 per share, or 16.3x forward P/E. Read our free research report to see why you should think twice about including HOLX in your portfolio.
Maximus (MMS)
Rolling One-Year Beta: 0.27
With nearly 50 years of experience translating public policy into operational programs that serve millions of citizens, Maximus (NYSE:MMS) provides operational services, clinical assessments, and technology solutions to government agencies in the U.S. and internationally.
Why Does MMS Give Us Pause?
- Estimated sales growth of 3.2% for the next 12 months implies demand will slow from its two-year trend
- 11.3 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $84.08 per share, Maximus trades at 11.4x forward P/E. Check out our free in-depth research report to learn more about why MMS doesn’t pass our bar.
Stocks We Like More
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at 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-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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