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.

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.

ON24 (ONTF)

Market Cap: $198.1 million

Started in 1998 as a platform to broadcast press conferences, ON24’s (NYSE: ONTF) software helps organizations organize online webinars and other virtual events and convert prospects into customers.

Why Is ONTF Risky?

1. Customers had second thoughts about committing to its platform over the last year as its billings averaged 8.1% declines
2. Net revenue retention rate of 91% shows it has a tough time retaining customers
3. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment

ON24’s stock price of $4.68 implies a valuation ratio of 1.4x forward price-to-sales. Check out our free in-depth research report to learn more about why ONTF doesn’t pass our bar.

Redwire (RDW)

Market Cap: $830.9 million

Based in Jacksonville, Florida, Redwire (NYSE: RDW) is a provider of systems and components used in space infrastructure.

Why Are We Cautious About RDW?

1. Earnings per share fell by 57% annually over the last four years while its revenue grew, partly because it diluted shareholders
2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Redwire is trading at $10.79 per share, or 15.2x forward EV-to-EBITDA. If you’re considering RDW for your portfolio, see our FREE research report to learn more.

Fortrea (FTRE)

Market Cap: $561.9 million

Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ: FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.

Why Do We Pass on FTRE?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.7% annually over the last two years
2. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
3. High net-debt-to-EBITDA ratio of 5× could force the company to raise capital at unfavorable terms if market conditions deteriorate

At $5.85 per share, Fortrea trades at 4.8x forward price-to-earnings. Read our free research report to see why you should think twice about including FTRE in your portfolio.

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.