Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.
These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. Keeping that in mind, here is one volatile stock that could deliver huge gains and two that could just as easily collapse.
Two Stocks to Sell:
Himax (HIMX)
Rolling One-Year Beta: 2.00
Taiwan-based Himax Technologies (NASDAQ:HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.
Why Are We Hesitant About HIMX?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.5% annually over the last two years
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 15.2 percentage points
Himax’s stock price of $8.38 implies a valuation ratio of 21.5x forward P/E. Read our free research report to see why you should think twice about including HIMX in your portfolio.
Alarm.com (ALRM)
Rolling One-Year Beta: 1.11
Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com (NASDAQ:ALRM) provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.
Why Are We Wary of ALRM?
- Average billings growth of 7.4% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Estimated sales growth of 3.7% for the next 12 months implies demand will slow from its three-year trend
- Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 65.8%
At $56.95 per share, Alarm.com trades at 3.4x forward price-to-sales. Check out our free in-depth research report to learn more about why ALRM doesn’t pass our bar.
One Stock to Watch:
Coherent (COHR)
Rolling One-Year Beta: 2.82
Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE:COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.
Why Does COHR Stand Out?
- Impressive 19.5% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Economies of scale give it some operating leverage when demand rises
- Projected revenue growth of 8.7% for the next 12 months indicates demand will rise above its two-year trend
Coherent is trading at $97.92 per share, or 21.3x forward P/E. Is now the time to initiate a position? 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.
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