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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
PubMatic (PUBM)
Market Cap: $567.5 million
Powering billions of daily ad impressions across the open internet, PubMatic (NASDAQ:PUBM) operates a technology platform that helps publishers maximize revenue from their digital advertising inventory while giving advertisers more control and transparency.
Why Is PUBM Risky?
- Competitive market dynamics make it difficult to retain customers, leading to a weak 96% net revenue retention rate
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Free cash flow margin is forecasted to shrink by 9.4 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
PubMatic’s stock price of $11.95 implies a valuation ratio of 1.8x forward price-to-sales. If you’re considering PUBM for your portfolio, see our FREE research report to learn more.
Commercial Vehicle Group (CVGI)
Market Cap: $172.8 million
Formed from a partnership between two distinct companies, CVG (NASDAQ:CVGI) offers various components used in vehicles and systems used in warehouses.
Why Do We Think CVGI Will Underperform?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.5% annually over the last five years
- Issuance of new shares over the last five years caused its earnings per share to fall by 36.2% annually, even worse than its revenue declines
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $5.13 per share, Commercial Vehicle Group trades at 0.3x trailing 12-month price-to-sales. Read our free research report to see why you should think twice about including CVGI in your portfolio.
FB Financial (FBK)
Market Cap: $2.67 billion
Founded in 1906 and operating through more than a century of economic cycles, FB Financial (NYSE:FBK) operates FirstBank, providing commercial and consumer banking services across Tennessee, Kentucky, Alabama, and North Georgia.
Why Are We Wary of FBK?
- Muted 1.4% annual revenue growth over the last five years shows its demand lagged behind its banking peers
- Earnings per share fell by 1.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Annual tangible book value per share growth of 8.8% over the last two years was below our standards for the banking sector
FB Financial is trading at $51.93 per share, or 1.3x forward P/B. Dive into our free research report to see why there are better opportunities than FBK.
Stocks We Like More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.