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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Griffon (GFF)
Market Cap: $3.95 billion
Initially in the defense industry, Griffon (NYSE: GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Why Does GFF Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.1% annually over the last five years
- Forecasted revenue decline of 14.3% for the upcoming 12 months implies demand will fall even further
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 6.3% annually
At $86.19 per share, Griffon trades at 16.2x forward P/E. If you’re considering GFF for your portfolio, see our FREE research report to learn more.
Repligen (RGEN)
Market Cap: $6.54 billion
With over 13 strategic acquisitions since 2012 to build its comprehensive bioprocessing portfolio, Repligen (NASDAQ: RGEN) develops and manufactures specialized technologies that improve the efficiency and flexibility of biological drug manufacturing processes.
Why Are We Out on RGEN?
- Modest revenue base of $763.3 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 18.1 percentage points
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Repligen’s stock price of $118.50 implies a valuation ratio of 58.8x forward P/E. Read our free research report to see why you should think twice about including RGEN in your portfolio.
Home Bancshares (HOMB)
Market Cap: $5.29 billion
Founded in Conway, Arkansas in 1998 and growing through strategic acquisitions across the Southeast, Home Bancshares (NYSE: HOMB) operates as the bank holding company for Centennial Bank, providing commercial and retail banking services to businesses and individuals across multiple states.
Why Are We Wary of HOMB?
- 5.6% annual revenue growth over the last two years was slower than its banking peers
- Net interest income trends were unexciting over the last five years as its 8.8% annual growth was below the typical banking firm
- Incremental sales over the last five years were less profitable as its 6.1% annual earnings per share growth lagged its revenue gains
Home Bancshares is trading at $26.26 per share, or 1.2x forward P/B. To fully understand why you should be careful with HOMB, check out our full research report (it’s free).
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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
