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.
Sportsman's Warehouse (SPWH)
Market Cap: $137.9 million
A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse (NASDAQ: SPWH) is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.
Why Should You Sell SPWH?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Historical operating margin losses point to an inefficient cost structure
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Sportsman's Warehouse’s stock price of $3.62 implies a valuation ratio of 3.7x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SPWH doesn’t pass our bar.
Rush Street Interactive (RSI)
Market Cap: $1.87 billion
Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.
Why Is RSI Not Exciting?
- Poor expense management has led to an operating margin of 2.6% that is below the industry average
Rush Street Interactive is trading at $19.58 per share, or 52x forward P/E. If you’re considering RSI for your portfolio, see our FREE research report to learn more.
Gorman-Rupp (GRC)
Market Cap: $1.10 billion
Powering fluid dynamics since 1934, Gorman-Rupp (NYSE: GRC) has evolved from its Ohio origins into a global manufacturer and seller of pumps and pump systems.
Why Does GRC Give Us Pause?
- Muted 3.3% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Projected sales growth of 3.7% for the next 12 months suggests sluggish demand
- 4.7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $41.89 per share, Gorman-Rupp trades at 18.8x forward P/E. Read our free research report to see why you should think twice about including GRC in your portfolio.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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