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.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Asana (ASAN)
Market Cap: $1.51 billion
Born from the founders' frustration with the inefficiencies of email-based collaboration at Facebook, Asana (NYSE:ASAN) provides a work management platform that helps organizations track projects, set goals, and manage workflows in a centralized digital workspace.
Why Do We Think ASAN Will Underperform?
- Average billings growth of 9.4% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Net revenue retention rate of 95.7% shows it has a tough time retaining customers
- Software platform has intricate integration requirements for its enterprise clients, triggering long sales cycles that limit new customer additions
At $6.28 per share, Asana trades at 1.8x forward price-to-sales. To fully understand why you should be careful with ASAN, check out our full research report (it’s free).
Masimo (MASI)
Market Cap: $9.29 billion
Founded in 1989 to solve the "unsolvable problem" of accurate pulse oximetry during patient movement, Masimo (NASDAQ:MASI) develops and manufactures noninvasive patient monitoring technologies, including its breakthrough pulse oximetry systems that accurately measure blood oxygen levels even during patient movement.
Why Does MASI Give Us Pause?
- Annual sales declines of 16.3% for the past two years show its products and services struggled to connect with the market during this cycle
- Revenue base of $1.48 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Masimo’s stock price of $178.01 implies a valuation ratio of 31.4x forward P/E. Check out our free in-depth research report to learn more about why MASI doesn’t pass our bar.
Columbia Banking System (COLB)
Market Cap: $8.25 billion
Created through the merger of two Pacific Northwest banking institutions with deep regional roots, Columbia Banking System (NASDAQ:COLB) operates Umpqua Bank, providing commercial, consumer, and wealth management services across eight western states.
Why Do We Think Twice About COLB?
- Muted 6.7% annual revenue growth over the last two years shows its demand lagged behind its banking peers
- Performance over the past five years shows its incremental sales were less profitable, as its 2.3% annual earnings per share growth trailed its revenue gains
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 1.4% annually over the last five years
Columbia Banking System is trading at $27.92 per share, or 1x forward P/B. If you’re considering COLB for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.