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.
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.
Kontoor Brands (KTB)
Market Cap: $4.37 billion
Founded in 2019 after separating from VF Corporation, Kontoor Brands (NYSE:KTB) is a clothing company known for its high-quality denim products.
Why Does KTB Worry Us?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Waning returns on capital imply its previous profit engines are losing steam
Kontoor Brands is trading at $78.60 per share, or 13.9x forward P/E. To fully understand why you should be careful with KTB, check out our full research report (it’s free for active Edge members).
Enpro (NPO)
Market Cap: $4.65 billion
Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries.
Why Are We Hesitant About NPO?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Flat earnings per share over the last two years underperformed the sector average
- ROIC of 6.4% reflects management’s challenges in identifying attractive investment opportunities
Enpro’s stock price of $220.71 implies a valuation ratio of 26.2x forward P/E. If you’re considering NPO for your portfolio, see our FREE research report to learn more.
Iridium (IRDM)
Market Cap: $1.99 billion
With a constellation of 66 low-earth orbit satellites providing coverage to every inch of the planet, Iridium Communications (NASDAQ:IRDM) operates a global satellite network that provides voice and data services to customers in remote areas where traditional telecommunications are unavailable.
Why Does IRDM Give Us Pause?
- Subscale operations are evident in its revenue base of $857.5 million, meaning it has fewer distribution channels than its larger rivals
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.1%
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $18.87 per share, Iridium trades at 16.7x forward P/E. Check out our free in-depth research report to learn more about why IRDM doesn’t pass our bar.
Stocks We Like More
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Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. 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).
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