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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Kulicke and Soffa (KLIC)
Market Cap: $3.23 billion
Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices
Why Does KLIC Give Us Pause?
- Sales tumbled by 1.6% annually over the last five years, showing market trends are working against its favor during this cycle
- Overall productivity fell over the last five years as its plummeting sales were accompanied by a decline in its operating margin
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
At $61.81 per share, Kulicke and Soffa trades at 22.1x forward P/E. To fully understand why you should be careful with KLIC, check out our full research report (it’s free).
Columbus McKinnon (CMCO)
Market Cap: $396.4 million
With 19 different brands across the globe, Columbus McKinnon (NASDAQ:CMCO) offers material handling equipment for the construction, manufacturing, and transportation industries.
Why Do We Think CMCO Will Underperform?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 7.6 percentage points
- Earnings per share fell by 10.5% annually over the last two years while its revenue was flat, showing each sale was less profitable
Columbus McKinnon is trading at $13.94 per share, or 8.4x forward P/E. Read our free research report to see why you should think twice about including CMCO in your portfolio.
Byline Bancorp (BY)
Market Cap: $1.42 billion
Ranking as the fifth most active Small Business Administration lender in the country, Byline Bancorp (NYSE:BY) is a Chicago-based bank that provides banking services to small and medium-sized businesses, commercial real estate developers, and consumers.
Why Are We Hesitant About BY?
- Annual revenue growth of 7.4% over the last two years was below our standards for the banking sector
- Estimated net interest income growth of 4.6% for the next 12 months implies demand will slow from its five-year trend
- Annual earnings per share growth of 2.4% underperformed its revenue over the last two years, showing its incremental sales were less profitable
Byline Bancorp’s stock price of $31.20 implies a valuation ratio of 1x forward P/B. If you’re considering BY for your portfolio, see our FREE research report to learn more.
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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.