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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
EverQuote (EVER)
Market Cap: $679.9 million
Aiming to simplify a once complicated process, EverQuote (NASDAQ: EVER) is an online insurance marketplace where consumers can compare and purchase various types of insurance from different providers
Why Does EVER Fall Short?
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
EverQuote is trading at $19.22 per share, or 0.8x forward price-to-gross profit. If you’re considering EVER for your portfolio, see our FREE research report to learn more.
Sonos (SONO)
Market Cap: $1.94 billion
A pioneer in connected home audio systems, Sonos (NASDAQ: SONO) offers a range of premium wireless speakers and sound systems.
Why Should You Dump SONO?
- Annual revenue declines of 1.4% over the last five years indicate problems with its market positioning
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 9.3% annually, worse than its revenue
- Low free cash flow margin of 6.2% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $15.81 per share, Sonos trades at 1.2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SONO.
Korn Ferry (KFY)
Market Cap: $3.67 billion
With clients including 97% of the S&P 100 and operations in 103 offices across 51 countries, Korn Ferry (NYSE: KFY) is a global consulting firm that helps organizations design optimal structures, recruit talent, develop leaders, and create effective compensation strategies.
Why Do We Think Twice About KFY?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Free cash flow margin dropped by 5.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital imply its previous profit engines are losing steam
Korn Ferry’s stock price of $70.71 implies a valuation ratio of 12.4x forward P/E. Check out our free in-depth research report to learn more about why KFY doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
