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.

LKQ (LKQ)

Market Cap: $8.50 billion

A global distributor of vehicle parts and accessories, LKQ (NASDAQ: LKQ) offers its customers a comprehensive selection of high-quality, affordably priced automobile products.

Why Do We Think LKQ Will Underperform?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Free cash flow margin is not anticipated to grow over the next year
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $33.17 per share, LKQ trades at 10.6x forward P/E. If you’re considering LKQ for your portfolio, see our FREE research report to learn more.

Surgery Partners (SGRY)

Market Cap: $2.09 billion

With more than 180 locations across 33 states serving as alternatives to traditional hospital settings, Surgery Partners (NASDAQ: SGRY) operates a national network of outpatient surgical facilities including ambulatory surgery centers and short-stay surgical hospitals.

Why Does SGRY Worry Us?

1. Weak unit sales over the past two years suggest it might have to lower prices to accelerate growth
2. Low free cash flow margin of 4.6% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Surgery Partners’s stock price of $16.52 implies a valuation ratio of 26x forward P/E. Read our free research report to see why you should think twice about including SGRY in your portfolio.

Hope Bancorp (HOPE)

Market Cap: $1.45 billion

With roots in serving Korean-American communities and now expanded to a multi-ethnic clientele across 12 states, Hope Bancorp (NASDAQ: HOPE) operates Bank of Hope, providing commercial and retail banking services with a focus on serving multi-ethnic communities across the United States.

Why Do We Pass on HOPE?

1. Flat sales over the last five years suggest it must find different ways to grow during this cycle
2. Flat net interest income over the last five years suggest it must find different ways to grow during this cycle
3. Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 4% annually

Hope Bancorp is trading at $11.29 per share, or 0.7x forward P/B. To fully understand why you should be careful with HOPE, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.