3 Small-Cap Stocks with Questionable Fundamentals

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. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.

USANA (USNA)

Market Cap: $551.4 million

Going to market with a direct selling model rather than through traditional retailers, USANA Health Sciences (NYSE:USNA) manufactures and sells nutritional, personal care, and skincare products.

Why Does USNA Give Us Pause?

1. Sales tumbled by 5.9% annually over the last three years, showing consumer trends are working against its favor
2. Subscale operations are evident in its revenue base of $899.2 million, meaning it has fewer distribution channels than its larger rivals
3. Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 16.2% annually, worse than its revenue

USANA is trading at $30.18 per share, or 10.4x forward P/E. If you’re considering USNA for your portfolio, see our FREE research report to learn more.

Adtalem (ATGE)

Market Cap: $4.89 billion

Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.

Why Is ATGE Not Exciting?

1. Annual revenue growth of 11% over the last two years was below our standards for the consumer discretionary sector
2. Estimated sales growth of 7.5% for the next 12 months implies demand will slow from its two-year trend
3. Underwhelming 10.1% return on capital reflects management’s difficulties in finding profitable growth opportunities

At $136.11 per share, Adtalem trades at 18.1x forward P/E. Dive into our free research report to see why there are better opportunities than ATGE.

Moderna (MRNA)

Market Cap: $9.73 billion

Rising to global prominence during the COVID-19 pandemic with one of the first effective vaccines, Moderna (NASDAQ:MRNA) develops messenger RNA (mRNA) medicines that direct the body's cells to produce proteins with therapeutic or preventive benefits for various diseases.

Why Are We Out on MRNA?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 46.3% annually over the last two years
2. Free cash flow margin shrank by 242.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Moderna’s stock price of $25.17 implies a valuation ratio of 5.1x forward price-to-sales. To fully understand why you should be careful with MRNA, check out our full research report (it’s free).

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 Kadant (+351% 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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