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. Keeping that in mind, here is one low-volatility stock that could succeed under all market conditions and two that may not deliver the returns you need.
Two Stocks to Sell:
Carriage Services (CSV)
Rolling One-Year Beta: 0.42
Established in 1991, Carriage Services (NYSE: CSV) is a provider of funeral and cemetery services in the United States.
Why Are We Bearish on CSV?
- Annual revenue growth of 3% over the last five years was below our standards for the consumer discretionary sector
- Poor free cash flow margin of 10.5% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
At $36.34 per share, Carriage Services trades at 10.2x forward P/E. To fully understand why you should be careful with CSV, check out our full research report (it’s free).
Coastal Financial (CCB)
Rolling One-Year Beta: 0.84
Pioneering the intersection of traditional banking and financial technology in the Pacific Northwest, Coastal Financial (NASDAQ: CCB) operates as a bank holding company that provides traditional banking services and Banking-as-a-Service (BaaS) solutions to consumers and businesses.
Why Does CCB Worry Us?
- Net interest margin increased by 2.8 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
- Efficiency ratio didn’t move over the last five years, showing it couldn’t increase its operational effectiveness
- Earnings per share fell by 16.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
Coastal Financial is trading at $43.66 per share, or 1.3x forward P/B. Read our free research report to see why you should think twice about including CCB in your portfolio.
One Stock to Watch:
Encompass Health (EHC)
Rolling One-Year Beta: 0.57
With a network of 161 specialized facilities across 37 states and Puerto Rico, Encompass Health (NYSE: EHC) operates inpatient rehabilitation hospitals that help patients recover from strokes, hip fractures, and other debilitating conditions.
Why Are We Fans of EHC?
- Free cash flow margin increased by 3.4 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are climbing as it finds even more attractive growth opportunities
- Improving returns on capital reflect management’s ability to monetize investments
Encompass Health’s stock price of $122.92 implies a valuation ratio of 19.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
