3 Small-Cap Stocks Facing Headwinds

Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.

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. That said, here are three small-cap stocks to avoid and some other investments you should consider instead.

Hain Celestial (HAIN)

Market Cap: $143.5 million

Sold in over 75 countries around the world, Hain Celestial (NASDAQ:HAIN) is a natural and organic food company whose products range from snacks to teas to baby food.

Why Do We Steer Clear of HAIN?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Forecasted revenue decline of 5.6% for the upcoming 12 months implies demand will fall even further
3. Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 43.5% annually, worse than its revenue

At $1.63 per share, Hain Celestial trades at 3.8x forward P/E. Read our free research report to see why you should think twice about including HAIN in your portfolio.

Alamo (ALG)

Market Cap: $2.62 billion

Expanding its markets through acquisitions since its founding, Alamo (NSYE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use.

Why Do We Avoid ALG?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.8%
3. Flat earnings per share over the last two years lagged its peers

Alamo is trading at $216.97 per share, or 21.2x forward P/E. Check out our free in-depth research report to learn more about why ALG doesn’t pass our bar.

Henry Schein (HSIC)

Market Cap: $8.44 billion

With a vast inventory of over 300,000 products stocked in distribution centers spanning more than 5.3 million square feet worldwide, Henry Schein (NASDAQ:HSIC) is a global distributor of healthcare products and services primarily to dental practices, medical offices, and other healthcare facilities.

Why Is HSIC Not Exciting?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Projected sales growth of 3.4% for the next 12 months suggests sluggish demand
3. Waning returns on capital imply its previous profit engines are losing steam

Henry Schein’s stock price of $68.91 implies a valuation ratio of 14x forward P/E. To fully understand why you should be careful with HSIC, check out our full research report (it’s free).

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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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