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. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Appian (APPN)
Market Cap: $1.77 billion
Powering billions of transactions daily since its founding in 1999, Appian (NASDAQ: APPN) provides a low-code platform that helps businesses automate complex processes and operationalize artificial intelligence without extensive programming knowledge.
Why Does APPN Give Us Pause?
- Estimated sales growth of 10.8% for the next 12 months implies demand will slow from its two-year trend
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Appian’s stock price of $23.41 implies a valuation ratio of 2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than APPN.
PacBio (PACB)
Market Cap: $512.3 million
Pioneering what scientists call "HiFi long-read sequencing," recognized as Nature Methods' method of the year for 2022, Pacific Biosciences (NASDAQ: PACB) develops advanced DNA sequencing systems that enable scientists and researchers to analyze genomes with unprecedented accuracy and completeness.
Why Do We Think Twice About PACB?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 10.6% annually over the last two years
- Negative free cash flow raises questions about the return timeline for its investments
- Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly
At $1.54 per share, PacBio trades at 2.9x forward price-to-sales. Check out our free in-depth research report to learn more about why PACB doesn’t pass our bar.
Tenaris (TEN)
Market Cap: $1.33 billion
Operating industrial facilities across the Americas, Europe, Middle East, and Asia, Tenaris (NYSE: TEN) manufactures seamless and welded steel pipes used in oil and gas drilling and transportation.
Why Are We Cautious About TEN?
- Sales trends were unexciting over the last five years as its 4.4% annual growth was below the typical energy upstream and integrated energy company
- Revenue base of $798.7 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
Tenaris is trading at $43.98 per share, or 5.6x forward P/E. Read our free research report to see why you should think twice about including TEN in your portfolio.
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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
