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.
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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
SunOpta (STKL)
Market Cap: $768.1 million
Committed to clean-label foods, SunOpta (NASDAQ: STKL) is a sustainability-focused food and beverage company specializing in the sourcing, processing, and packaging of organic products.
Why Should You Dump STKL?
- Sales tumbled by 1.6% annually over the last three years, showing consumer trends are working against its favor
- Subscale operations are evident in its revenue base of $792.4 million, meaning it has fewer distribution channels than its larger rivals
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 15.4% that must be offset through higher volumes
SunOpta is trading at $6.47 per share, or 36.6x forward P/E. Dive into our free research report to see why there are better opportunities than STKL.
Leggett & Platt (LEG)
Market Cap: $1.56 billion
Founded in 1883, Leggett & Platt (NYSE: LEG) is a diversified manufacturer of products and components for various industries.
Why Do We Think LEG Will Underperform?
- Products and services have few die-hard fans as sales have declined by 1.1% annually over the last five years
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 6% for the last two years
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $11.15 per share, Leggett & Platt trades at 10.6x forward P/E. Read our free research report to see why you should think twice about including LEG in your portfolio.
Oaktree Specialty Lending (OCSL)
Market Cap: $1.01 billion
Managed by Oaktree Capital Management, one of the world's premier alternative investment firms, Oaktree Specialty Lending (NASDAQ: OCSL) is a business development company that provides customized financing solutions to mid-market companies across various industries.
Why Are We Out on OCSL?
- Annual sales declines of 12.4% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 4.5% annually over the last five years
Oaktree Specialty Lending’s stock price of $11.29 implies a valuation ratio of 7.7x forward P/E. If you’re considering OCSL for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
