Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
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.
Monarch (MCRI)
Market Cap: $2.13 billion
Established in 1993, Monarch (NASDAQ: MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Why Do We Pass on MCRI?
- Annual revenue growth of 4.8% over the last two years was below our standards for the consumer discretionary sector
- Free cash flow margin is expected to remain in place over the coming year
- Rising returns on capital show management is making relatively better investments
Monarch’s stock price of $120.39 implies a valuation ratio of 9.9x forward EV-to-EBITDA. If you’re considering MCRI for your portfolio, see our FREE research report to learn more.
Target Hospitality (TH)
Market Cap: $1.73 billion
Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ: TH) is a provider of specialty workforce lodging accommodations and services.
Why Are We Out on TH?
- Number of utilized beds has disappointed over the past two years, indicating weak demand for its offerings
- Poor free cash flow margin of 9.2% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Target Hospitality is trading at $17.20 per share, or 4x forward price-to-sales. Check out our free in-depth research report to learn more about why TH doesn’t pass our bar.
Allient (ALNT)
Market Cap: $1.35 billion
Founded in 1962, Allient (NASDAQ: ALNT) develops and manufactures precision and specialty-controlled motion components and systems.
Why Do We Think Twice About ALNT?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.7% annually over the last two years
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- ROIC of 7.6% reflects management’s challenges in identifying attractive investment opportunities
At $80.01 per share, Allient trades at 27.1x forward P/E. Read our free research report to see why you should think twice about including ALNT in your portfolio.
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
