Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.
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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
BlackLine (BL)
Market Cap: $2.29 billion
Born from the vision to eliminate tedious manual spreadsheet work for accountants, BlackLine (NASDAQ: BL) provides cloud-based software that automates and streamlines financial close, intercompany accounting, and invoice-to-cash processes for accounting departments.
Why Do We Think Twice About BL?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 8.5% underwhelmed
- Customers generally do not adopt complementary products as its 104% net revenue retention rate lags behind the industry standard
- Operating margin was unchanged over the last year, suggesting it failed to gain leverage on its fixed costs
At $38.14 per share, BlackLine trades at 3.9x forward price-to-sales. Check out our free in-depth research report to learn more about why BL doesn’t pass our bar.
Quest Resource (QRHC)
Market Cap: $42.57 million
Recycling corporate waste to help companies be more sustainable, Quest Resource (NASDAQ: QRHC) is a provider of waste and recycling services.
Why Are We Out on QRHC?
- Sales tumbled by 3.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Quest Resource’s stock price of $2.03 implies a valuation ratio of 49.3x forward P/E. Dive into our free research report to see why there are better opportunities than QRHC.
First Financial Bancorp (FFBC)
Market Cap: $2.97 billion
Tracing its roots back to 1863 during the Civil War era, First Financial Bancorp (NASDAQ: FFBC) is a bank holding company that provides commercial banking, lending, deposit services, and wealth management to individuals and businesses.
Why Does FFBC Fall Short?
- Sales trends were unexciting over the last two years as its 4.7% annual growth was below the typical banking company
- Net interest income trends were unexciting over the last five years as its 7.1% annual growth was below the typical banking firm
- Incremental sales over the last two years were less profitable as its 2.8% annual earnings per share growth lagged its revenue gains
First Financial Bancorp is trading at $30.25 per share, or 1x forward P/B. Read our free research report to see why you should think twice about including FFBC in your portfolio.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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.
