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.
Oshkosh (OSK)
Market Cap: $8.44 billion
Oshkosh (NYSE: OSK) manufactures specialty vehicles for the defense, fire, emergency, and commercial industry, operating various brand subsidiaries within each industry.
Why Does OSK Give Us Pause?
- Backlog growth averaged a weak 1.3% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 16.4%
- Free cash flow margin dropped by 7.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Oshkosh’s stock price of $132.64 implies a valuation ratio of 11.2x forward P/E. If you’re considering OSK for your portfolio, see our FREE research report to learn more.
Select Medical (SEM)
Market Cap: $1.66 billion
With a nationwide network spanning 46 states and over 2,700 healthcare facilities, Select Medical (NYSE: SEM) operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers across the United States.
Why Do We Avoid SEM?
- Declining admissions over the past two years imply it may need to invest in improvements to get back on track
- Sales are projected to tank by 4.5% over the next 12 months as its demand continues evaporating
- Earnings per share fell by 3.4% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
At $13.39 per share, Select Medical trades at 11.8x forward P/E. Read our free research report to see why you should think twice about including SEM in your portfolio.
Radian Group (RDN)
Market Cap: $4.48 billion
Founded during the housing boom of 1977 and weathering multiple real estate cycles since, Radian Group (NYSE: RDN) provides mortgage insurance and real estate services, helping lenders manage risk and homebuyers achieve affordable homeownership.
Why Are We Hesitant About RDN?
- Insurance offerings face significant market challenges this cycle as net premiums earned contracted by 3% annually over the last five years
- Day-to-day expenses have swelled relative to revenue over the last two years as its combined ratio increased by 23.4 percentage points
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 1.5% annually
Radian Group is trading at $33.09 per share, or 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than RDN.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% 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
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