Stability is great, but low-volatility stocks may struggle to deliver market-beating returns over time as they sometimes underperform during bull markets.
Choosing the wrong investments can cause you to fall behind, which is why we started StockStory - to separate the winners from the losers. That said, here is one low-volatility stock that could succeed under all market conditions and two stuck in limbo.
Two stocks to sell:
Voya Financial (VOYA)
Rolling one-year beta: 0.58
Originally spun off from Dutch financial giant ING in 2013 and rebranded with a name suggesting "voyage," Voya Financial (NYSE: VOYA) provides workplace benefits and savings solutions to U.S. employers, helping their employees achieve better financial outcomes through retirement plans and insurance products.
Why Do We Think VOYA Will Underperform?
- Muted 4.4% annual revenue growth over the last two years shows its demand lagged behind its financials peers
- Incremental sales over the last two years were less profitable as its earnings per share were flat while its revenue grew
Voya Financial’s stock price of $98.48 implies a valuation ratio of 9.2x forward P/E. Read our free research report to see why you should think twice about including VOYA in your portfolio.
TFS Financial (TFSL)
Rolling one-year beta: 0.02
Tracing its roots back to 1938 during the Great Depression era when savings and loans were vital to homeownership, TFS Financial (NASDAQ: TFSL) is a savings and loan holding company that provides mortgage lending, deposit services, and other retail banking products primarily in Ohio and Florida.
Why Are We Bearish on TFSL?
- Muted 6.8% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Net interest margin of 1.8% is well below other banks, signaling its loans aren’t very profitable
- Capital generation will likely be weak over the next 12 months as Wall Street expects flat tangible book value per share
At $16.76 per share, TFS Financial trades at 2.4x forward P/B. If you’re considering TFSL for your portfolio, see our FREE research report to learn more.
One stock to watch:
UnitedHealth (UNH)
Rolling one-year beta: 0.73
With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE: UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.
Why Do We Like UNH?
- 10% annual revenue growth over the last five years was better than the sector average, highlighting the value of its products and services
- Dominant market position is represented by its $449.7 billion in revenue, which gives it negotiating power over membership pricing and reimbursement rates
- ROIC punches in at 19.1%, illustrating management’s expertise in identifying profitable investments
UnitedHealth is trading at $412.83 per share, or 17.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-quality stocks for all market conditions
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