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.
USANA (USNA)
Market Cap: $631.1 million
Going to market with a direct selling model rather than through traditional retailers, USANA Health Sciences (NYSE:USNA) manufactures and sells nutritional, personal care, and skincare products.
Why Are We Hesitant About USNA?
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Sales tumbled by 10.4% annually over the last three years, showing consumer trends are working against its favor
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Smaller revenue base of $854.5 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
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Sales were less profitable over the last three years as its earnings per share fell by 23.1% annually, worse than its revenue declines
USANA’s stock price of $32.43 implies a valuation ratio of 11.5x forward price-to-earnings. Read our free research report to see why you should think twice about including USNA in your portfolio, it’s free .
Paramount (PARA)
Market Cap: $8.15 billion
Owner of Spongebob Squarepants and formerly known as ViacomCBS, Paramount Global (NASDAQ:PARA) is a major media conglomerate offering television, film production, and digital content across various global platforms.
Why Is PARA Risky?
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Products and services have few die-hard fans as sales have declined by 1.6% annually over the last two years
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Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 20.5% annually
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Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $11.38 per share, Paramount trades at 7.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than PARA .
U.S. Physical Therapy (USPH)
Market Cap: $1.21 billion
Founded in 1990 with just six clinics, U.S. Physical Therapy (NYSE:USPH) operates outpatient physical therapy clinics across the country, offering rehabilitation services for orthopedic injuries, post-surgical recovery, and chronic pain management.
Why Does USPH Fall Short?
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6.9% annual revenue growth over the last five years was slower than its healthcare peers
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Revenue base of $671.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
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Earnings per share fell by 2.9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
U.S. Physical Therapy is trading at $77.93 per share, or 28.5x forward price-to-earnings. If you’re considering USPH for your portfolio, see our FREE research report to learn more .
Stocks We Like More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free .