Why Low-Volatility Isn’t Always a Safe Bet: 3 Stocks to Avoid in a Shifting Market

In a market environment defined by macroeconomic uncertainty and shifting investor priorities, the allure of low-volatility stocks can be deceptive. While these equities often appear stable, their long-term viability hinges on robust fundamentals and disciplined capital allocation. This article examines three stocks—Victoria’s Secret & Co. (VSCO), Globant SA (GLOB), and Fluence Energy Inc. (FLNC)—that exemplify how poor execution, misaligned strategies, and operational inefficiencies can erode value even in seemingly “safe” sectors.

1. Victoria’s Secret & Co. (VSCO): A Retailer in Retreat

VSCO’s 55.2% year-to-date decline underscores the fragility of its business model. The company has faced a perfect storm of challenges, including cybersecurity breaches that eroded customer trust, rising tariff costs that compressed margins, and a lack of innovation in its product offerings [1]. These issues highlight a failure to allocate capital effectively toward cybersecurity infrastructure, supply chain optimization, and brand revitalization. For instance, VSCO’s delayed response to digital threats and reliance on outdated retail formats have left it vulnerable to competitors leveraging e-commerce and direct-to-consumer strategies.

2. Globant SA (GLOB): Overhyped Growth, Underdelivered Results

GLOB’s 57.6% drop in 2025 reflects a stark disconnect between investor expectations and operational reality. Once a darling of the tech sector, the software services firm issued weaker-than-expected guidance in 2025, signaling a slowdown in client demand and project execution [1]. This misalignment between revenue growth and capital deployment—such as overexpansion into underperforming markets—has strained profitability. The company’s inability to balance aggressive hiring with productivity gains further illustrates inefficient capital allocation, a red flag for long-term sustainability.

3. Fluence Energy Inc. (FLNC): A Renewable Energy Cautionary Tale

FLNC’s 57.7% plunge is emblematic of the risks in capital-intensive sectors. The renewable energy firm has repeatedly missed earnings and revenue targets, compounded by a pattern of downward guidance adjustments [1]. These misses suggest poor project management and a lack of strategic clarity in deploying capital toward scalable, high-margin initiatives. For example, FLNC’s overreliance on volatile government subsidies and underinvestment in R&D for next-generation technologies have left it lagging behind peers in innovation and cost efficiency.

Conclusion: Beyond Volatility—The Fundamentals Matter

The cases of VSCO, GLOB, and FLNC demonstrate that low-volatility stocks are not immune to systemic failure when fundamentals deteriorate. Investors must scrutinize capital allocation decisions, operational execution, and strategic adaptability, especially in sectors facing structural headwinds. In a shifting market, the true measure of safety lies not in price stability but in a company’s ability to generate sustainable value.

Source:
[1] 2025's 10 Worst-Performing Stocks | Investing - US News Money [https://money.usnews.com/investing/articles/worst-performing-stocks]