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.
Monro (MNRO)
Market Cap: $472.9 million
Started as a single location in Rochester, New York, Monro (NASDAQ:MNRO) provides common auto services such as brake repairs, tire replacements, and oil changes.
Why Do We Think MNRO Will Underperform?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Modest revenue base of $1.20 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Earnings per share have contracted by 27% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
Monro’s stock price of $16.09 implies a valuation ratio of 19.2x forward P/E. To fully understand why you should be careful with MNRO, check out our full research report (it’s free).
TTM Technologies (TTMI)
Market Cap: $4.26 billion
As one of the world's largest printed circuit board manufacturers with facilities spanning North America and Asia, TTM Technologies (NASDAQ:TTMI) manufactures printed circuit boards (PCBs) and radio frequency (RF) components for aerospace, defense, automotive, and telecommunications industries.
Why Is TTMI Risky?
- Muted 1.3% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Free cash flow margin dropped by 9.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
TTM Technologies is trading at $42.49 per share, or 20.2x forward P/E. Read our free research report to see why you should think twice about including TTMI in your portfolio.
Synovus Financial (SNV)
Market Cap: $7.59 billion
Tracing its roots back to 1888 when a worker accidentally dropped a textile mill payroll into the dust, prompting the need for better banking, Synovus Financial (NYSE:SNV) is a regional financial services company that provides commercial and consumer banking, wealth management, and specialized lending services across five southeastern states.
Why Does SNV Give Us Pause?
- 4.2% annual net interest income growth over the last four years was slower than its bank peers
- Net interest margin of 3.2% reflects its high servicing and capital costs
- Annual tangible book value per share growth of 2.9% over the last five years was below our standards for the bank sector
At $54.59 per share, Synovus Financial trades at 1.4x forward P/B. Check out our free in-depth research report to learn more about why SNV doesn’t pass our bar.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today