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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Wix (WIX)
Market Cap: $3.79 billion
Powering over 263 million registered users worldwide with its AI-driven tools, Wix (NASDAQ: WIX) provides a cloud-based platform that helps individuals and businesses create and manage professional websites without requiring coding skills.
Why Are We Hesitant About WIX?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 13.7% underwhelmed
- Operating margin improvement of 1.9 percentage points over the last year demonstrates its ability to scale efficiently
- Projected 3.5 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
At $69.05 per share, Wix trades at 1.8x forward price-to-sales. Check out our free in-depth research report to learn more about why WIX doesn’t pass our bar.
Power Integrations (POWI)
Market Cap: $2.62 billion
A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ: POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.
Why Do We Avoid POWI?
- Sales tumbled by 1.9% annually over the last five years, showing market trends are working against its favor during this cycle
- Operating margin declined by 22.6 percentage points over the last five years as its sales cratered
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 6.1% annually, worse than its revenue
Power Integrations is trading at $45.26 per share, or 35.7x forward P/E. To fully understand why you should be careful with POWI, check out our full research report (it’s free).
1-800-FLOWERS (FLWS)
Market Cap: $228.1 million
Founded in 1976, 1-800-FLOWERS (NASDAQ: FLWS) is an online retailer of flowers, gifts, and gourmet foods, serving customers globally.
Why Is FLWS Risky?
- Products and services aren't resonating with the market as its revenue declined by 3.1% annually over the last five years
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- High net-debt-to-EBITDA ratio of 11× could force the company to raise capital at unfavorable terms if market conditions deteriorate
1-800-FLOWERS’s stock price of $3.54 implies a valuation ratio of 0.2x forward price-to-sales. If you’re considering FLWS for your portfolio, see our FREE research report to learn more.
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.
