Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
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. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Rapid7 (RPD)
Market Cap: $662.3 million
With its name inspired by the need for quick responses to cyber threats, Rapid7 (NASDAQ: RPD) provides cybersecurity software and services that help organizations detect vulnerabilities, monitor threats, and respond to security incidents.
Why Do We Avoid RPD?
- Offerings struggled to generate interest as its billings were flat over the last year
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 1.7 percentage points
At $9.86 per share, Rapid7 trades at 0.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than RPD.
Janus (JBI)
Market Cap: $725.6 million
Standing out with its digital keyless entry into self-storage room technology, Janus (NYSE: JBI) is a provider of easily accessible self-storage solutions.
Why Are We Cautious About JBI?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 8.4% annually over the last two years
- Earnings per share have contracted by 8% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Eroding returns on capital suggest its historical profit centers are aging
Janus is trading at $5.33 per share, or 6.6x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why JBI doesn’t pass our bar.
Simmons First National (SFNC)
Market Cap: $3.34 billion
With roots dating back to 1903 and a presence across Arkansas, Kansas, Missouri, Oklahoma, Tennessee, and Texas, Simmons First National (NASDAQ: SFNC) is a regional bank holding company that provides banking and financial services to individuals and businesses.
Why Are We Out on SFNC?
- Muted 5.4% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Efficiency ratio is expected to worsen by 19.8 percentage points over the next year
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 4.5% annually
Simmons First National’s stock price of $23.11 implies a valuation ratio of 0.9x forward P/B. Read our free research report to see why you should think twice about including SFNC in your portfolio.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
