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. That said, here are two low-volatility stocks providing safe-and-steady growth and one that may not keep up.
Rolling One-Year Beta: 0.58
Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE:MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.
Why Is MTH Risky?
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Backlog has dropped by 34.4% on average over the past two years, suggesting it’s losing orders as competition picks up
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Sales were less profitable over the last two years as its earnings per share fell by 16.8% annually, worse than its revenue declines
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Eroding returns on capital suggest its historical profit centers are aging
Meritage Homes is trading at $67.82 per share, or 10x forward P/E. To fully understand why you should be careful with MTH, check out our full research report (it’s free for active Edge members).
Rolling One-Year Beta: 0.44
Founded to commercialize SIMSCRIPT, CACI International (NYSE:CACI) offers defense, intelligence, and IT solutions to support national security and government transformation efforts.
Why Are We Positive On CACI?
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Average backlog growth of 11.3% over the past two years shows it has a steady sales pipeline that will drive future orders
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Business has a stable foundation, supported by its long-term operating margin of 8.6%
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Share repurchases over the last two years enabled its annual earnings per share growth of 20.6% to outpace its revenue gains
CACI’s stock price of $586.95 implies a valuation ratio of 20.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Rolling One-Year Beta: 0.65
Operating one of Latin America’s leading PIN debit networks called ATH, EVERTEC (NYSE:EVTC) is a payment transaction processor and financial technology provider that enables merchants and financial institutions across Latin America and the Caribbean to accept and process electronic payments.
Why Are We Bullish on EVTC?
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Impressive 16.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
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Earnings per share have grown at a respectable 12.5% annual rate over the last five years, a bit better than the industry average
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ROE punches in at 30.8%, illustrating management’s expertise in identifying profitable investments