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.
Integer Holdings (ITGR)
Market Cap: $2.99 billion
With its name reflecting the mathematical term for "whole" or "complete," Integer Holdings (NYSE: ITGR) is a medical device outsource manufacturer that produces components and systems for cardiac, vascular, neurological, and other medical applications.
Why Does ITGR Give Us Pause?
- Subscale operations are evident in its revenue base of $1.85 billion, meaning it has fewer distribution channels than its larger rivals
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
- Underwhelming 5.6% return on capital reflects management’s difficulties in finding profitable growth opportunities
Integer Holdings’s stock price of $86.77 implies a valuation ratio of 13.4x forward P/E. Dive into our free research report to see why there are better opportunities than ITGR.
Bio-Techne (TECH)
Market Cap: $9.06 billion
With a catalog of hundreds of thousands of specialized biological products used in laboratories worldwide, Bio-Techne (NASDAQ: TECH) develops and manufactures specialized reagents, instruments, and services that help researchers study biological processes and enable diagnostic testing and cell therapy development.
Why Should You Sell TECH?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Revenue base of $1.22 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Free cash flow margin shrank by 11.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $57 per share, Bio-Techne trades at 28.1x forward P/E. Read our free research report to see why you should think twice about including TECH in your portfolio.
Ingram Micro (INGM)
Market Cap: $4.85 billion
Operating as the crucial link in the global technology supply chain with a presence in 57 countries, Ingram Micro (NYSE: INGM) is a global technology distributor that connects manufacturers with resellers, providing hardware, software, cloud services, and logistics expertise.
Why Does INGM Worry Us?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.2% over the last five years was below our standards for the business services sector
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 7.8% annually
- Poor free cash flow margin of -0.1% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Ingram Micro is trading at $20.63 per share, or 6.6x forward P/E. If you’re considering INGM for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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