Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.

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.

Five9 (FIVN)

Market Cap: $1.59 billion

Taking its name from the "five nines" (99.999%) standard for optimal service reliability in telecommunications, Five9 (NASDAQ: FIVN) provides cloud-based software that enables businesses to run their contact centers with tools for customer service, sales, and marketing across multiple communication channels.

Why Should You Sell FIVN?

1. Products, pricing, or go-to-market strategy may need some adjustments as its 9.4% average billings growth over the last year was weak
2. Estimated sales growth of 10.1% for the next 12 months implies demand will slow from its two-year trend
3. Gross margin of 55.5% reflects its high servicing costs

Five9 is trading at $23.50 per share, or 1.6x forward price-to-sales. To fully understand why you should be careful with FIVN, check out our full research report (it’s free).

Hayward (HAYW)

Market Cap: $3.19 billion

Credited with introducing the first variable-speed pool pump, Hayward (NYSE: HAYW) makes residential and commercial pool equipment and accessories.

Why Does HAYW Give Us Pause?

1. Muted 2% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
2. Earnings per share have contracted by 9.6% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
3. 8.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Hayward’s stock price of $16.97 implies a valuation ratio of 19.3x forward P/E. If you’re considering HAYW for your portfolio, see our FREE research report to learn more.

Assured Guaranty (AGO)

Market Cap: $3.35 billion

Serving as a financial safety net for over $11 trillion in debt service payments since its founding in 2003, Assured Guaranty (NYSE: AGO) provides credit protection products that guarantee scheduled payments on municipal bonds, infrastructure projects, and structured finance obligations.

Why Are We Out on AGO?

1. Net premiums earned contracted by 5.2% annually over the last five years, showing unfavorable market dynamics this cycle
2. Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 15.4% annually, worse than its revenue

At $83.67 per share, Assured Guaranty trades at 0.6x forward P/B. Read our free research report to see why you should think twice about including AGO in your portfolio.

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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.