Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains. This unpredictability can shake out even the most experienced investors.
At StockStory, our job is to help you avoid costly mistakes and stay on the right side of the trade. That said, here are two volatile stocks with massive upside potential and one best left to the gamblers.
One Stock to Sell:
Kratos (KTOS)
Rolling One-Year Beta: 1.70
Established with a commitment to supporting national security, Kratos (NASDAQ: KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.
Why Does KTOS Give Us Pause?
- Long-term business health is up for debate as its cash burn has increased over the last five years
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Kratos is trading at $33.25 per share, or 57.5x forward price-to-earnings. Check out our free in-depth research report to learn more about why KTOS doesn’t pass our bar.
Two Stocks to Watch:
Toast (TOST)
Rolling One-Year Beta: 1.89
Founded by three MIT engineers at a local Cambridge bar, Toast (NYSE: TOST) provides integrated point-of-sale (POS) hardware, software, and payments solutions for restaurants.
Why Are We Positive On TOST?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Expected revenue growth of 22.6% for the next year suggests its market share will rise
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
Toast’s stock price of $35.90 implies a valuation ratio of 3.5x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
AAON (AAON)
Rolling One-Year Beta: 1.92
Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
Why Will AAON Beat the Market?
- Market share has increased this cycle as its 16.2% annual revenue growth over the last two years was exceptional
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 27.7% annually
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
At $85 per share, AAON trades at 29.3x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
