Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are three small-cap stocks to pass on and some alternatives you should look into instead.
Commercial Vehicle Group (CVGI)
Market Cap: $111.3 million
Formed from a partnership between two distinct companies, CVG (NASDAQ: CVGI) offers various components used in vehicles and systems used in warehouses.
Why Do We Think CVGI Will Underperform?
- Annual sales declines of 5.8% for the past five years show its products and services struggled to connect with the market during this cycle
- Earnings per share decreased by more than its revenue over the last five years, partly because it diluted shareholders
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Commercial Vehicle Group’s stock price of $2.93 implies a valuation ratio of 24.7x forward P/E. Dive into our free research report to see why there are better opportunities than CVGI.
Haemonetics (HAE)
Market Cap: $4.79 billion
With roots dating back to 1971 and a mission to improve blood-related healthcare, Haemonetics (NYSE: HAE) provides specialized medical devices and software for blood collection, processing, and management across plasma centers, blood banks, and hospitals.
Why Do We Think Twice About HAE?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Revenue base of $1.35 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
At $105.33 per share, Haemonetics trades at 19.2x forward P/E. To fully understand why you should be careful with HAE, check out our full research report (it’s free).
Chemed (CHE)
Market Cap: $6.57 billion
With a unique business model combining end-of-life care and household services, Chemed (NYSE: CHE) operates two distinct businesses: VITAS, which provides hospice care for terminally ill patients, and Roto-Rooter, which offers plumbing and water restoration services.
Why Does CHE Fall Short?
- Annual revenue growth of 4.1% over the last five years was below our standards for the healthcare sector
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 3.9 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
Chemed is trading at $505.07 per share, or 19.9x forward P/E. Read our free research report to see why you should think twice about including CHE in your portfolio.
Stocks We Like More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
