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. Keeping that in mind, here is one low-volatility stock that could succeed under all market conditions and two that may not keep up.
Two Stocks to Sell:
Brinker International (EAT)
Rolling One-Year Beta: 0.56
Founded by Norman Brinker in Dallas, Brinker International (NYSE:EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Why Are We Hesitant About EAT?
- Conservative approach to adding new restaurants shows management is focused on improving existing location performance
- Estimated sales growth of 3.3% for the next 12 months implies demand will slow from its six-year trend
- Lacking pricing power results in an inferior gross margin of 17% that must be offset by turning more tables
At $139.38 per share, Brinker International trades at 13.5x forward P/E. To fully understand why you should be careful with EAT, check out our full research report (it’s free for active Edge members).
First Watch (FWRG)
Rolling One-Year Beta: 0.88
Based on a nautical reference to the first work shift aboard a ship, First Watch (NASDAQ:FWRG) is a chain of breakfast and brunch restaurants whose menu is heavily-focused on eggs and griddle items such as pancakes.
Why Does FWRG Give Us Pause?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Cash-burning history and the downward spiral in its margin profile make us wonder if it has a viable business model
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
First Watch is trading at $17.70 per share, or 53.3x forward P/E. If you’re considering FWRG for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Palomar Holdings (PLMR)
Rolling One-Year Beta: 0.22
Founded in 2013 to fill gaps in catastrophe insurance markets, Palomar Holdings (NASDAQ:PLMR) is a specialty insurance provider that offers property and casualty insurance products in underserved markets, with a focus on earthquake coverage.
Why Is PLMR a Top Pick?
- Market penetration was impressive this cycle as its net premiums earned expanded by 46.1% annually over the last two years
- Balance sheet strength has increased this cycle as its 39.5% annual book value per share growth over the last two years was exceptional
- Book value per share outlook for the upcoming 12 months is outstanding and shows it’s on track to build significant equity value
Palomar Holdings’s stock price of $116.43 implies a valuation ratio of 3.4x forward P/B. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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