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.
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. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Caleres (CAL)
Market Cap: $363.5 million
The owner of Dr. Scholl's, Caleres (NYSE: CAL) is a footwear company offering a range of styles.
Why Should You Dump CAL?
- 5.4% annual revenue growth over the last five years was slower than its consumer discretionary peers
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $10.74 per share, Caleres trades at 7x forward P/E. If you’re considering CAL for your portfolio, see our FREE research report to learn more.
Plug Power (PLUG)
Market Cap: $3.36 billion
Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ: PLUG) provides hydrogen fuel cells used to power electric motors.
Why Does PLUG Give Us Pause?
- Annual sales declines of 10.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Plug Power’s stock price of $2.41 implies a valuation ratio of 4x forward price-to-sales. Check out our free in-depth research report to learn more about why PLUG doesn’t pass our bar.
United Natural Foods (UNFI)
Market Cap: $2.72 billion
With a vast network of 55 distribution centers spanning approximately 30 million square feet of warehouse space, United Natural Foods (NYSE: UNFI) is North America's premier grocery wholesaler distributing natural, organic, and conventional products to over 30,000 retail locations across the US and Canada.
Why Do We Steer Clear of UNFI?
- The company has faced growth challenges as its 1.8% annual revenue increases over the last three years fell short of other consumer staples companies
- Earnings per share fell by 29.3% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable
- High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens
United Natural Foods is trading at $44.84 per share, or 15.5x forward P/E. To fully understand why you should be careful with UNFI, 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
