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.

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.

LiveRamp (RAMP)

Market Cap: $1.79 billion

Started in 2011 as a spin-out of RapLeaf, LiveRamp (NYSE: RAMP) is a software-as-a-service provider that helps companies better target their marketing by merging offline and online data about their customers.

Why Do We Think Twice About RAMP?

1. Annual revenue growth of 12.9% over the last three years was below our standards for the software sector
2. Estimated sales growth of 7.8% for the next 12 months implies demand will slow from its three-year trend

LiveRamp is trading at $28.12 per share, or 2.3x forward price-to-sales. If you’re considering RAMP for your portfolio, see our FREE research report to learn more.

AAR (AIR)

Market Cap: $2.40 billion

The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE: AIR) is a provider of aircraft maintenance services

Why Is AIR Not Exciting?

1. Annual revenue growth of 3.2% over the last five years was below our standards for the industrials sector
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. ROIC of 6.4% reflects management’s challenges in identifying attractive investment opportunities

At $69.58 per share, AAR trades at 16.6x forward price-to-earnings. Read our free research report to see why you should think twice about including AIR in your portfolio.

Tri Pointe Homes (TPH)

Market Cap: $2.89 billion

Established in 2009 in California, Tri Pointe Homes (NYSE: TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.

Why Is TPH Risky?

1. Backlog has dropped by 8.8% on average over the past two years, suggesting it’s losing orders as competition picks up
2. Estimated sales decline of 14.5% for the next 12 months implies a challenging demand environment
3. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 6.9% annually

Tri Pointe Homes’s stock price of $31.41 implies a valuation ratio of 6.9x forward price-to-earnings. Check out our free in-depth research report to learn more about why TPH doesn’t pass our bar.

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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.