3 Small-Cap Stocks with Open Questions

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.

Hertz (HTZ)

Market Cap: $2.33 billion

Started with a dozen Model T Fords, Hertz (NASDAQ:HTZ) is a global car rental company providing vehicle rental services to leisure and business travelers.

Why Are We Out on HTZ?

1. Disappointing unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
2. Diminishing returns on capital suggest its earlier profit pools are drying up
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Hertz’s stock price of $7.59 implies a valuation ratio of 6.4x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why HTZ doesn’t pass our bar.

Myriad Genetics (MYGN)

Market Cap: $492.2 million

Founded in 1991 as one of the pioneers in translating genetic discoveries into clinical applications, Myriad Genetics (NASDAQ:MYGN) develops genetic tests that assess disease risk, guide treatment decisions, and provide insights across oncology, women's health, and mental health.

Why Is MYGN Risky?

1. Sales trends were unexciting over the last five years as its 1.8% annual growth was below the typical healthcare company
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 28.9% annually while its revenue grew
3. Push for growth has led to negative returns on capital, signaling value destruction, and its decreasing returns suggest its historical profit centers are aging

Myriad Genetics is trading at $5.34 per share, or 41.9x forward P/E. If you’re considering MYGN for your portfolio, see our FREE research report to learn more.

Berkshire Hills Bancorp (BHLB)

Market Cap: $1.20 billion

Founded in 1846 as a community financial institution in Massachusetts, Berkshire Hills Bancorp (NYSE:BHLB) is a regional bank holding company that provides commercial banking, retail banking, wealth management, and lending services through branches across the Northeast.

Why Are We Cautious About BHLB?

1. Net interest income trends were unexciting over the last four years as its 3.7% annual growth was below the typical bank company
2. Estimated tangible book value per share decline of 14.8% for the next 12 months implies a challenging profitability environment
3. ROE of 0% reflects management’s challenges in identifying attractive investment opportunities

At $26.21 per share, Berkshire Hills Bancorp trades at 0.9x forward P/B. To fully understand why you should be careful with BHLB, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

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 6 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

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