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3 Small-Cap Stocks Walking a Fine Line

By: StockStory

March 03, 2025 at 08:04 AM EST

ANGI Cover Image

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.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.

Angi (ANGI)

Market Cap: $835.4 million

Created by IAC’s mergers of Angie’s List and HomeAdvisor, ANGI (NASDAQ: ANGI) operates the largest online marketplace for home services in the US.

Why Are We Wary of ANGI?

Service Requests have declined by 23.3% annually over the last two years, suggesting it may need to revamp its features or user experience to stay competitive
Projected sales decline of 13% over the next 12 months indicates demand will continue deteriorating
Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas

Angi’s stock price of $1.67 implies a valuation ratio of 6.7x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why ANGI doesn’t pass our bar.

Lattice Semiconductor (LSCC)

Market Cap: $8.59 billion

A global leader in its category, Lattice Semiconductor (NASDAQ: LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning.

Why Does LSCC Worry Us?

Products and services are facing significant end-market challenges during this cycle as sales have declined by 12.2% annually over the last two years
Estimated sales growth of 2.9% for the next 12 months is soft and implies weaker demand
Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 6.1 percentage points

Lattice Semiconductor is trading at $63 per share, or 57.8x forward price-to-earnings. Read our free research report to see why you should think twice about including LSCC in your portfolio.

Accel Entertainment (ACEL)

Market Cap: $922.7 million

Established in Illinois, Accel Entertainment (NYSE: ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.

Why Are We Cautious About ACEL?

12.7% annual revenue growth over the last two years was slower than its consumer discretionary peers
Estimated sales growth of 6.1% for the next 12 months implies demand will slow from its two-year trend
Low free cash flow margin of 3.4% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

At $10.79 per share, Accel Entertainment trades at 11.2x forward price-to-earnings. To fully understand why you should be careful with ACEL, check out our full research report (it’s free).

Stocks We Like More

The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we’re here to help you pick them.

Get started by checking out our Top 6 Stocks for this week. 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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.