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.
TEGNA (TGNA)
Market Cap: $3.35 billion
Spun out of Gannett in 2015, TEGNA (NYSE: TGNA) is a media company operating a network of television stations and digital platforms, focusing on local news and community content.
Why Do We Avoid TGNA?
- Annual revenue declines of 1.6% over the last five years indicate problems with its market positioning
- Sales were less profitable over the last five years as its earnings per share fell by 6.5% annually, worse than its revenue declines
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
TEGNA is trading at $20.64 per share, or 6.8x forward P/E. Read our free research report to see why you should think twice about including TGNA in your portfolio.
GEO Group (GEO)
Market Cap: $1.89 billion
With a global footprint spanning three continents and approximately 81,000 beds across 100 facilities, GEO Group (NYSE: GEO) operates secure facilities, processing centers, and reentry services for government agencies in the United States, Australia, and South Africa.
Why Are We Hesitant About GEO?
- Muted 2.3% annual revenue growth over the last five years shows its demand lagged behind its business services peers
- Day-to-day expenses have swelled relative to revenue over the last four years as its adjusted operating margin fell by 6.3 percentage points
- Free cash flow margin dropped by 14.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $14.33 per share, GEO Group trades at 12.5x forward P/E. To fully understand why you should be careful with GEO, check out our full research report (it’s free).
Exponent (EXPO)
Market Cap: $3.54 billion
With a team of over 800 consultants holding advanced degrees in 90+ technical disciplines, Exponent (NASDAQ: EXPO) is a science and engineering consulting firm that investigates complex problems and provides expert analysis for clients across various industries.
Why Is EXPO Not Exciting?
- Muted 3.9% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Free cash flow margin shrank by 4.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Diminishing returns on capital suggest its earlier profit pools are drying up
Exponent’s stock price of $71.90 implies a valuation ratio of 31.1x forward P/E. Check out our free in-depth research report to learn more about why EXPO doesn’t pass our bar.
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
