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.
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.
Marcus & Millichap (MMI)
Market Cap: $1.38 billion
Founded in 1971, Marcus & Millichap (NYSE: MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Why Are We Out on MMI?
- Products and services aren't resonating with the market as its revenue declined by 2.9% annually over the last five years
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Diminishing returns on capital suggest its earlier profit pools are drying up
Marcus & Millichap is trading at $35.01 per share, or 442.9x forward price-to-earnings. To fully understand why you should be careful with MMI, check out our full research report (it’s free).
Vicor (VICR)
Market Cap: $2.42 billion
Founded by a researcher at the Massachusetts Institute of Technology, Vicor (NASDAQ: VICR) provides electrical power conversion and delivery products for a range of industries.
Why Does VICR Worry Us?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5.1% annually over the last two years
- Earnings per share have contracted by 5.9% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Waning returns on capital imply its previous profit engines are losing steam
At $55 per share, Vicor trades at 50.3x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than VICR.
Trinity (TRN)
Market Cap: $2.40 billion
Operating under the trade name TrinityRail, Trinity (NYSE: TRN) is a provider of railcar products and services in North America.
Why Are We Wary of TRN?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Cash-burning history makes us doubt the long-term viability of its business model
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Trinity’s stock price of $29.38 implies a valuation ratio of 17.9x forward price-to-earnings. Read our free research report to see why you should think twice about including TRN in your portfolio.
Stocks We Like More
The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market - and we’re zeroing in on the stocks that could benefit immensely.
Take advantage of the rebound by checking out our Top 5 Strong Momentum 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.
