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.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Calavo (CVGW)
Market Cap: $490.9 million
A trailblazer in the avocado industry, Calavo Growers (NASDAQ: CVGW) is a pioneering California-based provider of high-quality avocados and other fresh food products.
Why Do We Steer Clear of CVGW?
- Products aren't resonating with the market as its revenue declined by 15.8% annually over the last three years
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 10.5% that must be offset through higher volumes
Calavo is trading at $27.52 per share, or 14.4x forward P/E. To fully understand why you should be careful with CVGW, check out our full research report (it’s free).
American Airlines (AAL)
Market Cap: $8.69 billion
One of the ‘Big Four’ airlines in the US, American Airlines (NASDAQ: AAL) is a major global air carrier that serves both business and leisure travelers through its domestic and international flights.
Why Is AAL Risky?
- Performance surrounding its revenue passenger miles has lagged its peers
- Underwhelming 3.3% return on capital reflects management’s difficulties in finding profitable growth opportunities
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
American Airlines’s stock price of $13.20 implies a valuation ratio of 8.8x forward P/E. If you’re considering AAL for your portfolio, see our FREE research report to learn more.
Triumph Financial (TFIN)
Market Cap: $1.28 billion
Originally focused on traditional banking before pivoting to serve the transportation sector, Triumph Financial (NASDAQ: TFIN) provides specialized financial services to the trucking industry, including payments processing, factoring, banking, and data intelligence solutions.
Why Is TFIN Not Exciting?
- 6.4% annual net interest income growth over the last five years was slower than its banking peers
- Net interest margin dropped by 121 basis points (100 basis points = 1 percentage point) over the last two years, implying the firm’s loan book profitability fell as competitors entered the market
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 19.4% annually
At $53.75 per share, Triumph Financial trades at 1.4x forward P/B. Check out our free in-depth research report to learn more about why TFIN doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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