1 Safe-and-Steady Stock with Competitive Advantages and 2 to Be Wary Of

A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance. Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.

Finding the right balance between safety and returns isn’t easy, which is why StockStory is here to help. Keeping that in mind, here is one low-volatility stock providing safe-and-steady growth and two that may not deliver the returns you need.

Two Stocks to Sell:

Dollar Tree (DLTR)

Rolling One-Year Beta: 0.64

A treasure hunt because there’s no guarantee of consistent product selection, Dollar Tree (NASDAQ:DLTR) is a discount retailer that sells general merchandise and select packaged food at extremely low prices.

Why Is DLTR Not Exciting?

1. Sizable revenue base leads to growth challenges as its 3.2% annual revenue increases over the last five years fell short of other consumer retail companies
2. Gross margin of 31.3% is below its competitors, leaving less money for marketing and promotions
3. Underwhelming 9.8% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam

At $83 per share, Dollar Tree trades at 14.1x forward price-to-earnings. Read our free research report to see why you should think twice about including DLTR in your portfolio.

U-Haul (UHAL)

Rolling One-Year Beta: 0.89

Founded by a husband and wife duo, U-Haul (NYSE:UHAL) is a provider of rental trucks and storage facilities.

Why Are We Out on UHAL?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.6% annually over the last two years
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 38.3 percentage points
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

U-Haul’s stock price of $59.95 implies a valuation ratio of 2.1x trailing 12-month price-to-sales. To fully understand why you should be careful with UHAL, check out our full research report (it’s free).

One Stock to Watch:

Paycom (PAYC)

Rolling One-Year Beta: 0.92

Founded in 1998 as one of the first online payroll companies, Paycom (NYSE:PAYC) provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.

Why Are We Fans of PAYC?

1. Superior software functionality and low servicing costs are reflected in its stellar gross margin of 84.8%
2. Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
3. Disciplined cost controls and effective management resulted in a strong trailing 12-month operating margin of 33.7%, and its profits increased over the last year as it scaled

Paycom is trading at $219.13 per share, or 6.1x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.