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.
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.
Peloton (PTON)
Market Cap: $2.78 billion
Started as a Kickstarter campaign, Peloton (NASDAQ: PTON) is a fitness technology company known for its at-home exercise equipment and interactive online workout classes.
Why Do We Steer Clear of PTON?
- Performance surrounding its connected fitness subscribers has lagged its peers
- Sales over the last five years were less profitable as its earnings per share fell by 16.5% annually while its revenue was flat
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Peloton’s stock price of $6.69 implies a valuation ratio of 35.7x forward P/E. If you’re considering PTON for your portfolio, see our FREE research report to learn more.
PlayStudios (MYPS)
Market Cap: $80.09 million
Founded by a team of former gaming industry executives, PlayStudios (NASDAQ: MYPS) offers free-to-play digital casino games.
Why Do We Think MYPS Will Underperform?
- Number of daily active users has disappointed over the past two years, indicating weak demand for its offerings
- Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 14.2% for the last two years
PlayStudios is trading at $0.64 per share, or 2.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than MYPS.
Affiliated Managers Group (AMG)
Market Cap: $7.53 billion
Using a partnership approach that preserves entrepreneurial culture at its portfolio companies, Affiliated Managers Group (NYSE: AMG) is an investment firm that acquires stakes in boutique asset management companies while allowing them to maintain operational independence.
Why Do We Think Twice About AMG?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.3% annually over the last two years
- Earnings per share lagged its peers over the last two years as they only grew by 7.8% annually
At $266.70 per share, Affiliated Managers Group trades at 9.2x forward P/E. To fully understand why you should be careful with AMG, check out our full research report (it’s free for active Edge members).
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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-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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