Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Floor And Decor (FND)
Market Cap: $5.47 billion
Operating large, warehouse-style stores, Floor & Decor (NYSE: FND) is a specialty retailer that specializes in hard flooring surfaces for the home such as tiles, hardwood, stone, and laminates.
Why Should You Dump FND?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 12.9% annually
- ROIC of 8% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up
Floor And Decor is trading at $50.29 per share, or 24.4x forward P/E. Read our free research report to see why you should think twice about including FND in your portfolio.
AMC Networks (AMCX)
Market Cap: $366.1 million
Originally the joint-venture of four cable television companies, AMC Networks (NASDAQ: AMCX) is a broadcaster producing a diverse range of television shows and movies.
Why Should You Sell AMCX?
- Products and services have few die-hard fans as sales have declined by 3.9% annually over the last five years
- Projected 3.3 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $8.57 per share, AMC Networks trades at 5x forward P/E. If you’re considering AMCX for your portfolio, see our FREE research report to learn more.
Covenant Logistics (CVLG)
Market Cap: $845.1 million
Started with 25 trucks and 50 trailers, Covenant Logistics (NASDAQ: CVLG) is a provider of expedited long haul freight services, offering a range of logistics solutions.
Why Do We Avoid CVLG?
- 3.8% annual revenue growth over the last two years was slower than its industrials peers
- 7.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Covenant Logistics’s stock price of $33.70 implies a valuation ratio of 0.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than CVLG.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
