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. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Utz (UTZ)
Market Cap: $1.21 billion
Tracing its roots back to 1921 when Bill and Salie Utz began making potato chips in their kitchen, Utz Brands (NYSE: UTZ) offers salty snacks such as potato chips, tortilla chips, pretzels, cheese snacks, and ready-to-eat popcorn, among others.
Why Do We Steer Clear of UTZ?
- Flat unit sales over the past two years suggest it might have to lower prices to stimulate growth
- Modest revenue base of $1.41 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Utz is trading at $14.03 per share, or 17.2x forward price-to-earnings. Read our free research report to see why you should think twice about including UTZ in your portfolio.
Littelfuse (LFUS)
Market Cap: $3.77 billion
The developer of the first blade-type automotive fuse, Littelfuse (NASDAQ: LFUS) provides electrical protection and control components for the automotive, industrial, electronics, and telecommunications industries.
Why Should You Sell LFUS?
- Annual sales declines of 6.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Sales were less profitable over the last two years as its earnings per share fell by 29% annually, worse than its revenue declines
- Eroding returns on capital suggest its historical profit centers are aging
At $152.50 per share, Littelfuse trades at 15x forward price-to-earnings. Check out our free in-depth research report to learn more about why LFUS doesn’t pass our bar.
AMC Entertainment (AMC)
Market Cap: $1.14 billion
With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE: AMC) operates movie theaters primarily in the US and Europe.
Why Should You Dump AMC?
- Annual revenue declines of 3.3% over the last five years indicate problems with its market positioning
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
AMC Entertainment’s stock price of $2.74 implies a valuation ratio of 1.9x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than AMC.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
