A highly volatile stock can deliver big gains – or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren’t prepared.
Navigating these stocks isn’t easy, which is why StockStory helps you find Comfort In Chaos. Keeping that in mind, here is one volatile stock with massive upside potential and two that might not be worth the risk.
Two Stocks to Sell:
Twilio (TWLO)
Rolling One-Year Beta: 1.28
Known for the clever “Twilio Magic” demo that had developers creating functioning communications apps in minutes, Twilio (NYSE:TWLO) provides a platform that enables businesses to communicate with their customers through voice, messaging, email, and other digital channels.
Why Does TWLO Give Us Pause?
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Annual revenue growth of 14.7% over the last two years was below our standards for the software sector
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Sky-high servicing costs result in an inferior gross margin of 48.6% that must be offset through increased usage
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Operating margin expanded by 3.7 percentage points over the last year as it scaled and became more efficient
Twilio’s stock price of $295.25 implies a valuation ratio of 7.3x forward price-to-sales. Check out our free in-depth research report to learn more about why TWLO doesn’t pass our bar.
Walker & Dunlop (WD)
Rolling One-Year Beta: 1.13
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE:WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Why Are We Out on WD?
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Annual net interest income declines of 41.6% for the past five years show its loan book struggled during this cycle
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Earnings per share fell by 13.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
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Tangible book value per share tumbled by 8.5% annually over the last five years, showing banking sector trends are working against it during this cycle
At $37.27 per share, Walker & Dunlop trades at 0.7x forward P/B. Read our free research report to see why you should think twice about including WD in your portfolio, it’s free.
One Stock to Buy:
Happen Bank (HAPN)
Rolling One-Year Beta: 1.79
Pioneering peer-to-peer lending in the US before evolving into a digital bank, Happen Bank (NASDAQ:HAPN) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.
Why Will HAPN Beat the Market?
