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.
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.
fuboTV (FUBO)
Market Cap: $1.24 billion
Originally launched as a soccer streaming platform, fuboTV (NYSE: FUBO) is a video streaming service specializing in live sports, news, and entertainment content.
Why Does FUBO Give Us Pause?
- Sluggish trends in its domestic subscribers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Projected 10.8 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
fuboTV’s stock price of $3.63 implies a valuation ratio of 142.9x forward EV-to-EBITDA. If you’re considering FUBO for your portfolio, see our FREE research report to learn more.
Dine Brands (DIN)
Market Cap: $381.6 million
Operating a franchise model, Dine Brands (NYSE: DIN) is a casual restaurant chain that owns the Applebee’s and IHOP banners.
Why Is DIN Risky?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Earnings per share fell by 10.1% annually over the last six years while its revenue was flat, showing each sale was less profitable
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $24.73 per share, Dine Brands trades at 4.7x forward P/E. To fully understand why you should be careful with DIN, check out our full research report (it’s free).
Insperity (NSP)
Market Cap: $2.45 billion
Pioneering the professional employer organization (PEO) industry it helped establish, Insperity (NYSE: NSP) provides human resources outsourcing services to small and medium-sized businesses, handling payroll, benefits, compliance, and HR administration.
Why Does NSP Fall Short?
- Sales trends were unexciting over the last two years as its 4.1% annual growth was below the typical business services company
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 5.7% annually
- 5.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Insperity is trading at $65.21 per share, or 17.7x forward P/E. Check out our free in-depth research report to learn more about why NSP doesn’t pass our bar.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
