1 Volatile Stock for Long-Term Investors and 2 Facing Challenges
A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren’t prepared.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here is one volatile stock that could reward patient investors and two that may be too risky for most investors.
Two Stocks to Sell:
AeroVironment (AVAV)
Rolling One-Year Beta: 3.07
Focused on the future of autonomous military combat, AeroVironment (NASDAQ:AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.
Why Do We Think Twice About AVAV?
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 12.4 percentage points
- Cash burn has widened over the last five years, making us question whether it can reliably generate shareholder value
- Negative returns on capital show management lost money while trying to expand the business
AeroVironment’s stock price of $157.00 implies a valuation ratio of 47.1x forward P/E. Dive into our free research report to see why there are better opportunities than AVAV.
IBM (IBM)
Rolling One-Year Beta: 1.51
With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE:IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.
Why Is IBM Not Exciting?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4.3% over the last five years was below our standards for the business services sector
- Anticipated sales growth of 4.1% for the next year implies demand will be shaky
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 8.6% annually
At $232.88 per share, IBM trades at 18.1x forward P/E. Check out our free in-depth research report to learn more about why IBM doesn’t pass our bar.
One Stock to Buy:
Lyft (LYFT)
Rolling One-Year Beta: 2.39
Founded by Logan Green and John Zimmer as a long-distance intercity carpooling company Zimride, Lyft (NASDAQ: LYFT) operates a ridesharing network in the US and Canada.
What Makes LYFT Stand Out?
- Active Riders have grown by 13.7% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 70.4% outpaced its revenue gains
- Free cash flow margin increased by 24.8 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Lyft is trading at $14.76 per share, or 6.5x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.