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.

The Honest Company (HNST)

Market Cap: $405 million

Co-founded by actress Jessica Alba, The Honest Company (NASDAQ: HNST) sells diapers and wipes, skin care products, and household cleaning products.

Why Do We Avoid HNST?

1. Revenue base of $389.8 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. 6.6 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
3. Push for growth has led to negative returns on capital, signaling value destruction

The Honest Company’s stock price of $3.65 implies a valuation ratio of 14.2x forward EV-to-EBITDA. If you’re considering HNST for your portfolio, see our FREE research report to learn more.

Laureate Education (LAUR)

Market Cap: $4.33 billion

Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ: LAUR) is a global network of higher education institutions.

Why Do We Think Twice About LAUR?

1. Demand for its offerings was relatively low as its number of enrolled students has underwhelmed
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 9.3% annually while its revenue grew
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Laureate Education is trading at $29.37 per share, or 15.1x forward P/E. Read our free research report to see why you should think twice about including LAUR in your portfolio.

Kemper (KMPR)

Market Cap: $3.09 billion

Originally known as Unitrin until rebranding in 2011, Kemper (NYSE: KMPR) is an insurance holding company that provides automobile, homeowners, life, and other insurance products to individuals and businesses across the United States.

Why Are We Out on KMPR?

1. Insurance offerings faced market headwinds this cycle, reflected in stagnant net premiums earned over the last five years
2. Earnings per share have contracted by 1.4% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
3. Products and services are facing significant credit quality challenges during this cycle as book value per share has declined by 6.3% annually over the last five years

At $49.24 per share, Kemper trades at 1x forward P/B. Check out our free in-depth research report to learn more about why KMPR doesn’t pass our bar.

Stocks We Like More

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 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

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.