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. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Asure (ASUR)
Market Cap: $266.6 million
Created from the merger of two small workforce management companies in 2007, Asure (NASDAQ: ASUR) provides cloud based payroll and HR software for small and medium-sized businesses (SMBs).
Why Is ASUR Not Exciting?
- Average billings growth of 6.9% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 6.4 percentage points
- Cash-burning history makes us doubt the long-term viability of its business model
At $10 per share, Asure trades at 1.9x forward price-to-sales. Read our free research report to see why you should think twice about including ASUR in your portfolio.
Olaplex (OLPX)
Market Cap: $844.1 million
Rising to fame on TikTok because of its “bond building" hair products, Olaplex (NASDAQ: OLPX) offers products and treatments that repair the damage caused by traditional heat and chemical-based styling goods.
Why Are We Wary of OLPX?
- Products aren't resonating with the market as its revenue declined by 10.9% annually over the last three years
- Inability to adjust its cost structure while its revenue declined over the last year led to a 7.8 percentage point drop in the company’s operating margin
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
Olaplex is trading at $1.31 per share, or 10.8x forward price-to-earnings. If you’re considering OLPX for your portfolio, see our FREE research report to learn more.
Dun & Bradstreet (DNB)
Market Cap: $3.68 billion
Known for its proprietary D-U-N-S Number that serves as a unique identifier for businesses worldwide, Dun & Bradstreet (NYSE: DNB) provides business decisioning data and analytics that help companies evaluate credit risks, verify suppliers, enhance sales productivity, and gain market visibility.
Why Does DNB Fall Short?
- Muted 3.5% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Earnings per share have dipped by 1.1% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- ROIC of 0.2% reflects management’s challenges in identifying attractive investment opportunities
Dun & Bradstreet’s stock price of $8.38 implies a valuation ratio of 7.6x forward price-to-earnings. Check out our free in-depth research report to learn more about why DNB doesn’t pass our bar.
Stocks We Like More
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Get started by checking out 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 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
