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.
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.
RXO (RXO)
Market Cap: $2.46 billion
With access to millions of trucks, RXO (NYSE: RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
Why Should You Sell RXO?
- Flat unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
RXO’s stock price of $14.94 implies a valuation ratio of 28.9x forward EV-to-EBITDA. To fully understand why you should be careful with RXO, check out our full research report (it’s free).
Viasat (VSAT)
Market Cap: $7.29 billion
Operating a fleet of 23 satellites that orbit the Earth and beam connectivity from space, Viasat (NASDAQ: VSAT) provides satellite-based communications networks and services for airlines, maritime vessels, governments, businesses, and residential customers worldwide.
Why Does VSAT Worry Us?
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 2.6% annually
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Negative returns on capital show management lost money while trying to expand the business
At $53.60 per share, Viasat trades at 82.6x forward P/E. Dive into our free research report to see why there are better opportunities than VSAT.
Weatherford (WFRD)
Market Cap: $6.83 billion
Operating in roughly 75 countries with over 300 facilities worldwide, Weatherford (NASDAQ: WFRD) provides equipment and services for drilling, completing, and maintaining oil and gas wells.
Why Are We Cautious About WFRD?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.3% annually over the last ten years
- Costly operations and weak unit economics result in an inferior gross margin of 31.5% that must be offset through higher production volumes
Weatherford is trading at $95.29 per share, or 17.4x forward P/E. Read our free research report to see why you should think twice about including WFRD in your portfolio.
Stocks We Like More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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.
