3 Small-Cap Stocks with Open Questions

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.

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 swipe left on and some alternatives you should look into instead.

Yext (YEXT)

Market Cap: $981.6 million

Founded in 2006 by Howard Lerman, Yext (NYSE:YEXT) offers software as a service that helps their clients manage and monitor their online listings and customer reviews across all relevant databases, from Google Maps to Alexa or Siri.

Why Are We Wary of YEXT?

1. Average ARR growth of 8.8% over the last year has disappointed, suggesting it’s had a hard time winning long-term deals and renewals
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.7%
3. Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue

At $8.02 per share, Yext trades at 2.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than YEXT.

Apogee (APOG)

Market Cap: $939.8 million

Involved in the design of the Apple Store on Fifth Avenue in New York City, Apogee (NASDAQ:APOG) sells architectural products and services such as high-performance glass for commercial buildings.

Why Should You Dump APOG?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.4% annually over the last two years
2. Projected sales growth of 3% for the next 12 months suggests sluggish demand
3. Flat earnings per share over the last two years underperformed the sector average

Apogee’s stock price of $43.65 implies a valuation ratio of 10.5x forward P/E. Read our free research report to see why you should think twice about including APOG in your portfolio.

KB Home (KBH)

Market Cap: $4.29 billion

The first homebuilder to be listed on the NYSE, KB Home (NYSE:KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.

Why Is KBH Risky?

1. Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 20.8% declines over the past two years
2. Sales are projected to tank by 10.4% over the next 12 months as its demand continues evaporating
3. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable

KB Home is trading at $63.98 per share, or 9x forward P/E. If you’re considering KBH for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound 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

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