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.
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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Etsy (ETSY)
Market Cap: $5.75 billion
Founded by a struggling amateur furniture maker Robert Kalin and his two friends, Etsy (NASDAQ: ETSY) is one of the world’s largest online marketplaces, focusing on handmade or vintage items.
Why Is ETSY Not Exciting?
- Market opportunities are plateauing as its active buyers were flat over the last two years
- Estimated sales growth of 2.8% for the next 12 months implies demand will slow from its three-year trend
- Incremental sales over the last three years were much less profitable as its earnings per share fell by 1.1% annually while its revenue grew
Etsy is trading at $58.27 per share, or 10.5x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than ETSY.
Sirius XM (SIRI)
Market Cap: $7.35 billion
Known for its commercial-free music channels, Sirius XM (NASDAQ: SIRI) is a broadcasting company that provides satellite radio and online radio services across North America.
Why Do We Avoid SIRI?
- Demand for its offerings was relatively low as its number of core subscribers has underwhelmed
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $21.80 per share, Sirius XM trades at 7.1x forward P/E. If you’re considering SIRI for your portfolio, see our FREE research report to learn more.
Universal Logistics (ULH)
Market Cap: $425.5 million
Founded in 1932, Universal Logistics (NASDAQ: ULH) is a provider of customized transportation and logistics solutions operating throughout the United States and in Mexico, Canada, and Colombia.
Why Should You Sell ULH?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 4.1% annually over the last two years
- Sales were less profitable over the last two years as its earnings per share fell by 28% annually, worse than its revenue declines
- Negative free cash flow raises questions about the return timeline for its investments
Universal Logistics’s stock price of $16.16 implies a valuation ratio of 12.8x forward P/E. Check out our free in-depth research report to learn more about why ULH doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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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