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.
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.
SiteOne (SITE)
Market Cap: $5.97 billion
Known for distributing John Deere tractors and LESCO turf care products, SiteOne Landscape Supply (NYSE: SITE) provides landscaping products and services to professionals, including irrigation, lighting, and nursery supplies.
Why Does SITE Give Us Pause?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Earnings per share fell by 12.2% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Eroding returns on capital suggest its historical profit centers are aging
SiteOne is trading at $132.23 per share, or 32.3x forward P/E. Read our free research report to see why you should think twice about including SITE in your portfolio.
Mercury Systems (MRCY)
Market Cap: $3.14 billion
Founded in 1981, Mercury Systems (NASDAQ: MRCY) specializes in providing processing subsystems and components for primarily defense applications.
Why Do We Avoid MRCY?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Issuance of new shares over the last five years caused its earnings per share to fall by 28% annually while its revenue grew
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Mercury Systems’s stock price of $52.81 implies a valuation ratio of 75x forward P/E. Dive into our free research report to see why there are better opportunities than MRCY.
Valley National Bank (VLY)
Market Cap: $5.15 billion
Tracing its roots back to 1927 during the economic boom before the Great Depression, Valley National Bancorp (NASDAQGS:VLY) operates Valley National Bank, providing commercial, consumer, and wealth management banking services across several states.
Why Do We Think Twice About VLY?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.1% annually over the last two years
- Net interest margin of 2.9% is well below other banks, signaling its loans aren’t very profitable
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 25% annually, worse than its revenue
At $9.38 per share, Valley National Bank trades at 0.7x forward P/B. To fully understand why you should be careful with VLY, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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 Kadant (+351% 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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