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. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Asure Software (ASUR)
Market Cap: $223.8 million
Operating in the often-overlooked smaller metropolitan markets where HR expertise can be scarce, Asure Software (NASDAQ: ASUR) provides cloud-based human capital management software and services that help small and medium-sized businesses manage payroll, taxes, time tracking, and HR compliance.
Why Do We Think ASUR Will Underperform?
- 4.4% annual revenue growth over the last two years was slower than its software peers
- Offerings struggled to generate meaningful interest as its average billings growth of 7.1% over the last year did not impress
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 3.2 percentage points
Asure Software’s stock price of $8 implies a valuation ratio of 1.5x forward price-to-sales. Read our free research report to see why you should think twice about including ASUR in your portfolio.
Portillo's (PTLO)
Market Cap: $470.3 million
Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ: PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.
Why Are We Wary of PTLO?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $6.56 per share, Portillo's trades at 16.5x forward P/E. If you’re considering PTLO for your portfolio, see our FREE research report to learn more.
PVH (PVH)
Market Cap: $3.98 billion
Founded in 1881 by a husband and wife duo, PVH (NYSE: PVH) is a global fashion conglomerate with iconic brands like Calvin Klein and Tommy Hilfiger.
Why Do We Avoid PVH?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Anticipated sales growth of 2.5% for the next year implies demand will be shaky
- ROIC of 1.3% reflects management’s challenges in identifying attractive investment opportunities, and its decreasing returns suggest its historical profit centers are aging
PVH is trading at $82.68 per share, or 7x forward P/E. To fully understand why you should be careful with PVH, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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