3 Small-Cap Stocks We Keep Off Our Radar

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.

Saia (SAIA)

Market Cap: $7.97 billion

Pivoting its business model after realizing there was more success in delivering produce than selling it, Saia (NASDAQ:SAIA) is a provider of freight transportation solutions.

Why Is SAIA Not Exciting?

1. Earnings per share fell by 7.3% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
2. Free cash flow margin dropped by 9.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $301.45 per share, Saia trades at 28.8x forward P/E. To fully understand why you should be careful with SAIA, check out our full research report (it’s free).

Herc (HRI)

Market Cap: $4.08 billion

Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE:HRI) provides equipment rental and related services to a wide range of industries.

Why Does HRI Worry Us?

1. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 3.4% annually
2. 13.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens

Herc’s stock price of $122.82 implies a valuation ratio of 9.9x forward P/E. Check out our free in-depth research report to learn more about why HRI doesn’t pass our bar.

Elanco (ELAN)

Market Cap: $9.32 billion

Originally established as a division of pharmaceutical giant Eli Lilly before becoming independent in 2018, Elanco Animal Health (NYSE:ELAN) develops and sells medications, vaccines, and other health products for pets and farm animals across more than 90 countries.

Why Are We Wary of ELAN?

1. Muted 1.8% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
2. Constant currency revenue growth has disappointed over the past two years and shows demand was soft
3. Negative returns on capital show that some of its growth strategies have backfired

Elanco is trading at $18.75 per share, or 21.4x forward P/E. Read our free research report to see why you should think twice about including ELAN in your portfolio.

Stocks We Like More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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-small-cap company Comfort Systems (+782% 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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