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.
These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. That said, here is one volatile stock that could deliver huge gains and two that could just as easily collapse.
Two Stocks to Sell:
DigitalOcean (DOCN)
Rolling One-Year Beta: 1.82
Built for simplicity in a world of complex cloud solutions, DigitalOcean (NYSE:DOCN) provides a simplified cloud computing platform that enables developers and small businesses to quickly deploy and scale applications.
Why Is DOCN Not Exciting?
- Sales trends were unexciting over the last three years as its 19.2% annual growth was below the typical software company
- Customers have churned over the last year due to the commoditized nature of its software, as reflected in its 98.8% net revenue retention rate
- Bad unit economics and steep infrastructure costs are reflected in its gross margin of 59.7%, one of the worst among software companies
At $32.50 per share, DigitalOcean trades at 3.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than DOCN.
Lemonade (LMND)
Rolling One-Year Beta: 1.26
Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade (NYSE:LMND) is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.
Why Are We Cautious About LMND?
- Flat earnings per share over the last four years underperformed the sector average
- Policy losses and capital returns have eroded its book value per share this cycle as its book value per share declined by 183% annually over the last five years
- Push for growth has led to negative returns on capital, signaling value destruction
Lemonade is trading at $52.65 per share, or 8.5x forward P/B. Read our free research report to see why you should think twice about including LMND in your portfolio.
One Stock to Buy:
Construction Partners (ROAD)
Rolling One-Year Beta: 1.62
Founded in 2001, Construction Partners (NASDAQ:ROAD) is a civil infrastructure company that builds and maintains roads, highways, and other infrastructure projects.
Why Will ROAD Outperform?
- Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 9.6% over the past two years
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 70.6% outpaced its revenue gains
- Free cash flow margin increased by 5.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Construction Partners’s stock price of $122 implies a valuation ratio of 44.3x 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
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% 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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