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.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Jack in the Box (JACK)
Market Cap: $220.5 million
Delighting customers since its inception in 1951, Jack in the Box (NASDAQ:JACK) is a distinctive fast-food chain known for its bold flavors, innovative menu items, and quirky marketing.
Why Do We Pass on JACK?
- Recent restaurant closures and weak same-store sales point to soft demand and an operational restructuring
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
Jack in the Box is trading at $11.80 per share, or 3.2x forward P/E. To fully understand why you should be careful with JACK, check out our full research report (it’s free).
Community Bank (CBU)
Market Cap: $3.38 billion
Tracing its roots back to 1866 in upstate New York, Community Financial System (NYSE:CBU) is a financial holding company that provides banking, employee benefits, wealth management, and insurance services to retail, commercial, and municipal customers.
Why Do We Think Twice About CBU?
- Muted 7% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Annual earnings per share growth of 4.1% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Products and services are facing profitability challenges during this cycle, as seen in its flat tangible book value per share over the last five years
Community Bank’s stock price of $64.33 implies a valuation ratio of 1.5x forward P/B. Dive into our free research report to see why there are better opportunities than CBU.
DHT Holdings (DHT)
Market Cap: $2.63 billion
With each vessel capable of carrying roughly 2 million barrels of oil—enough to fill about 125 Olympic swimming pools—DHT Holdings (NYSE:DHT) operates very large crude carriers that transport crude oil across international routes for energy companies and traders.
Why Does DHT Worry Us?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Modest revenue base of $448 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- High extraction costs and unfavorable asset economics are reflected in its low gross margin of 33.5%
At $16.25 per share, DHT Holdings trades at 6x forward P/E. Read our free research report to see why you should think twice about including DHT in your portfolio.
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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.