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.

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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.

Coty (COTY)

Market Cap: $2.95 billion

With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.

Why Is COTY Risky?

1. Absence of organic revenue growth over the past one years suggests it may have to lean into acquisitions to drive its expansion
2. Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 6.3 percentage points
3. Earnings per share have dipped by 14.1% annually over the past three years, which is concerning because stock prices follow EPS over the long term

At $3.35 per share, Coty trades at 7.4x forward P/E. Read our free research report to see why you should think twice about including COTY in your portfolio.

iHeartMedia (IHRT)

Market Cap: $663.5 million

Occasionally featuring celebrity hosts like Ryan Seacrest on its shows, iHeartMedia (NASDAQ: IHRT) is a leading multimedia company renowned for its extensive network of radio stations, digital platforms, and live events across the globe.

Why Do We Steer Clear of IHRT?

1. Muted 4.9% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
2. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

iHeartMedia’s stock price of $4.66 implies a valuation ratio of 0.8x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why IHRT doesn’t pass our bar.

Acushnet (GOLF)

Market Cap: $4.97 billion

Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE: GOLF) is a design and manufacturing company specializing in performance-driven golf products.

Why Do We Pass on GOLF?

1. Annual revenue growth of 10.1% over the last five years was below our standards for the consumer discretionary sector
2. Poor free cash flow margin of 7.2% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Acushnet is trading at $84.69 per share, or 21.1x forward P/E. Read our free research report to see why you should think twice about including GOLF in your portfolio.

Stocks We Like More

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 9 Market-Beating Stocks. 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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