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.

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.

Energizer (ENR)

Market Cap: $2.13 billion

Masterminds behind the viral Energizer Bunny mascot, Energizer (NYSE: ENR) is one of the world's largest manufacturers of batteries.

Why Is ENR Risky?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Projected sales growth of 1.1% for the next 12 months suggests sluggish demand
3. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 4 percentage points

Energizer’s stock price of $29.52 implies a valuation ratio of 8.3x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than ENR.

Hain Celestial (HAIN)

Market Cap: $375 million

Sold in over 75 countries around the world, Hain Celestial (NASDAQ: HAIN) is a natural and organic food company whose products range from snacks to teas to baby food.

Why Do We Think HAIN Will Underperform?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Projected sales decline of 1.3% over the next 12 months indicates demand will continue deteriorating
3. Sales were less profitable over the last three years as its earnings per share fell by 41.2% annually, worse than its revenue declines

Hain Celestial is trading at $4.29 per share, or 8.7x forward price-to-earnings. To fully understand why you should be careful with HAIN, check out our full research report (it’s free).

Rush Street Interactive (RSI)

Market Cap: $1 billion

Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.

Why Does RSI Worry Us?

1. Suboptimal cost structure is highlighted by its history of operating losses
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

At $10.62 per share, Rush Street Interactive trades at 33.5x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than RSI.

Stocks We Like More

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.