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 swipe left on and some alternatives you should look into instead.
Torrid (CURV)
Market Cap: $148.7 million
Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE: CURV) is a plus-size women’s apparel and accessories retailer.
Why Do We Pass on CURV?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $1.50 per share, Torrid trades at 26.5x forward P/E. If you’re considering CURV for your portfolio, see our FREE research report to learn more.
TEGNA (TGNA)
Market Cap: $3.22 billion
Spun out of Gannett in 2015, TEGNA (NYSE: TGNA) is a media company operating a network of television stations and digital platforms, focusing on local news and community content.
Why Do We Steer Clear of TGNA?
- Annual sales declines of 2.5% for the past two years show its products and services struggled to connect with the market
- Projected sales decline of 8.5% over the next 12 months indicates demand will continue deteriorating
- Projected 4.2 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
TEGNA’s stock price of $20.01 implies a valuation ratio of 10.9x forward P/E. Dive into our free research report to see why there are better opportunities than TGNA.
Cogent (CCOI)
Market Cap: $2.10 billion
Operating a massive network spanning 20,000 miles of fiber optic cable and connecting to over 3,200 buildings worldwide, Cogent Communications (NASDAQ: CCOI) provides high-speed Internet access, private network services, and data center colocation to businesses and bandwidth-intensive organizations across 54 countries.
Why Does CCOI Fall Short?
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 39.7 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Cogent is trading at $44.20 per share, or 6.2x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why CCOI doesn’t pass our bar.
Stocks We Like More
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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 Exlservice (+354% 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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