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.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Wix (WIX)
Market Cap: $4.48 billion
Powering over 263 million registered users worldwide with its AI-driven tools, Wix (NASDAQ: WIX) provides a cloud-based platform that helps individuals and businesses create and manage professional websites without requiring coding skills.
Why Are We Hesitant About WIX?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 13.1% underwhelmed
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 5.6 percentage points
- Projected 7.7 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
At $75.75 per share, Wix trades at 1.9x forward price-to-sales. Check out our free in-depth research report to learn more about why WIX doesn’t pass our bar.
Freshpet (FRPT)
Market Cap: $3.24 billion
Standing out from typical processed pet foods, Freshpet (NASDAQ: FRPT) is a pet food company whose product portfolio includes natural meals and treats for dogs and cats.
Why Is FRPT Not Exciting?
- Smaller revenue base of $1.10 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Low free cash flow margin of -1% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Freshpet’s stock price of $67.79 implies a valuation ratio of 48.1x forward P/E. Dive into our free research report to see why there are better opportunities than FRPT.
Bristow Group (VTOL)
Market Cap: $1.36 billion
Operating what's essentially an airborne taxi service for some of the world's most remote workplaces, Bristow Group (NYSE: VTOL) operates helicopters that transport workers to offshore oil and gas platforms and conduct search and rescue operations.
Why Are We Out on VTOL?
- Muted 5.7% annual revenue growth over the last five years shows its demand lagged behind its energy upstream and integrated energy peers
- Modest revenue base of $1.49 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 0.6% for the last five years
Bristow Group is trading at $46.47 per share, or 8.6x forward P/E. To fully understand why you should be careful with VTOL, check out our full research report (it’s free).
Stocks We Like More
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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
