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.
Karat Packaging (KRT)
Market Cap: $595.5 million
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
Why Does KRT Fall Short?
- Earnings per share have contracted by 5.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Karat Packaging is trading at $29.85 per share, or 1.2x trailing 12-month price-to-sales. If you’re considering KRT for your portfolio, see our FREE research report to learn more.
Lazard (LAZ)
Market Cap: $4.22 billion
Tracing its roots back to 1848 when it began as a dry goods merchant in New Orleans, Lazard (NYSE: LAZ) is a global financial advisory and asset management firm that provides strategic advice to corporations, governments, institutions, and wealthy individuals.
Why Do We Think Twice About LAZ?
- 3.2% annual revenue growth over the last five years was slower than its financials peers
- Earnings per share fell by 9.9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
At $44.91 per share, Lazard trades at 13.3x forward P/E. To fully understand why you should be careful with LAZ, check out our full research report (it’s free).
Select Water Solutions (WTTR)
Market Cap: $2.30 billion
Managing over 24 billion barrels of produced water annually across major U.S. shale plays, Select Water Solutions (NYSE: WTTR) provides water sourcing, recycling, disposal, and treatment services for oil and gas producers.
Why Does WTTR Worry Us?
- Modest revenue base of $1.40 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Gross margin of 23.5% reflects its high production costs and unfavorable asset base
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 0.1% for the last five years
Select Water Solutions’s stock price of $18.20 implies a valuation ratio of 1.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than WTTR.
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
