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.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Boyd Gaming (BYD)
Market Cap: $6.13 billion
Run by the Boyd family, Boyd Gaming (NYSE: BYD) is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.
Why Are We Hesitant About BYD?
- Annual revenue growth of 4.1% over the last two years was below our standards for the consumer discretionary sector
- Demand will likely fall over the next 12 months as Wall Street expects flat revenue
- ROIC of 13.8% reflects management’s challenges in identifying attractive investment opportunities
At $75.48 per share, Boyd Gaming trades at 11.7x forward P/E. Dive into our free research report to see why there are better opportunities than BYD.
Boise Cascade (BCC)
Market Cap: $3.37 billion
Formed through the merger of two lumber companies, Boise Cascade Company (NYSE: BCC) manufactures and distributes wood products and other building materials.
Why Do We Steer Clear of BCC?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.7% annually over the last two years
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 30.1% annually, worse than its revenue
- Waning returns on capital imply its previous profit engines are losing steam
Boise Cascade is trading at $89.54 per share, or 10.6x forward P/E. If you’re considering BCC for your portfolio, see our FREE research report to learn more.
Sphere Entertainment (SPHR)
Market Cap: $1.37 billion
Famous for its viral Las Vegas Sphere venue, Sphere Entertainment (NYSE: SPHR) hosts live entertainment events and distributes content across various media platforms.
Why Are We Out on SPHR?
- Annual revenue growth of 2.4% over the last five years was below our standards for the consumer discretionary sector
- Negative free cash flow raises questions about the return timeline for its investments
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Sphere Entertainment’s stock price of $38.01 implies a valuation ratio of 7.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SPHR doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
