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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Ameresco (AMRC)
Market Cap: $711.7 million
Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE: AMRC) provides energy and renewable energy solutions for various sectors.
Why Should You Sell AMRC?
- Annual revenue growth of 6.1% over the last two years was below our standards for the industrials sector
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Ameresco is trading at $13.53 per share, or 12.9x forward P/E. Read our free research report to see why you should think twice about including AMRC in your portfolio.
Resideo (REZI)
Market Cap: $3.06 billion
Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.
Why Are We Cautious About REZI?
- Sales trends were unexciting over the last two years as its 4.8% annual growth was below the typical industrials company
- Estimated sales growth of 4.4% for the next 12 months is soft and implies weaker demand
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $20.59 per share, Resideo trades at 5.1x forward EV-to-EBITDA. To fully understand why you should be careful with REZI, check out our full research report (it’s free).
Installed Building Products (IBP)
Market Cap: $4.36 billion
Founded in 1977, Installed Building Products (NYSE: IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.
Why Is IBP Not Exciting?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Estimated sales decline of 2.8% for the next 12 months implies a challenging demand environment
- Earnings per share lagged its peers over the last two years as they only grew by 5.5% annually
Installed Building Products’s stock price of $159 implies a valuation ratio of 14.9x forward P/E. Read our free research report to see why you should think twice about including IBP in your portfolio.
Stocks We Like More
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 6 Stocks for this week. 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.
