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.

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. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.

Sinclair (SBGI)

Market Cap: $1.11 billion

With over 2,400 hours of local news produced weekly and 640 broadcast channels reaching millions of American homes, Sinclair (NASDAQ: SBGI) operates a network of 185 local television stations across 86 U.S. markets, producing news programming and distributing content from major networks.

Why Do We Avoid SBGI?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 11.2% annually over the last five years
2. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
3. 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Sinclair’s stock price of $15.91 implies a valuation ratio of 8.8x forward EV-to-EBITDA. To fully understand why you should be careful with SBGI, check out our full research report (it’s free for active Edge members).

Rush Street Interactive (RSI)

Market Cap: $1.91 billion

Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.

Why Do We Steer Clear of RSI?

1. Performance surrounding its monthly active users has lagged its peers
2. Subpar operating margin of 4.1% constrains its ability to invest in process improvements or effectively respond to new competitive threats
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 10.4% for the last two years

At $19.50 per share, Rush Street Interactive trades at 40.6x forward P/E. If you’re considering RSI for your portfolio, see our FREE research report to learn more.

Integral Ad Science (IAS)

Market Cap: $1.72 billion

Processing over 280 billion digital ad interactions daily through its AI-powered technology, Integral Ad Science (NASDAQ: IAS) provides a cloud-based platform that measures and verifies digital advertising across devices, channels, and formats to ensure ads are viewable, fraud-free, and brand-safe.

Why Does IAS Worry Us?

1. Revenue increased by 13.6% annually over the last two years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
2. Operating margin expanded by 1 percentage points over the last year as it scaled and became more efficient
3. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 10.9 percentage points over the next year

Integral Ad Science is trading at $10.26 per share, or 2.6x forward price-to-sales. Check out our free in-depth research report to learn more about why IAS doesn’t pass our bar.

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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.