3 Small-Cap Stocks That Concern Us

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

Asure Software (ASUR)

Market Cap: $223.8 million

Operating in the often-overlooked smaller metropolitan markets where HR expertise can be scarce, Asure Software (NASDAQ:ASUR) provides cloud-based human capital management software and services that help small and medium-sized businesses manage payroll, taxes, time tracking, and HR compliance.

Why Do We Think ASUR Will Underperform?

1. 4.4% annual revenue growth over the last two years was slower than its software peers
2. Offerings struggled to generate meaningful interest as its average billings growth of 7.1% over the last year did not impress
3. Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 3.2 percentage points

Asure Software’s stock price of $8 implies a valuation ratio of 1.5x forward price-to-sales. Read our free research report to see why you should think twice about including ASUR in your portfolio.

Portillo's (PTLO)

Market Cap: $470.3 million

Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ:PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.

Why Are We Wary of PTLO?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $6.56 per share, Portillo's trades at 16.5x forward P/E. If you’re considering PTLO for your portfolio, see our FREE research report to learn more.

PVH (PVH)

Market Cap: $3.98 billion

Founded in 1881 by a husband and wife duo, PVH (NYSE:PVH) is a global fashion conglomerate with iconic brands like Calvin Klein and Tommy Hilfiger.

Why Do We Avoid PVH?

1. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
2. Anticipated sales growth of 2.5% for the next year implies demand will be shaky
3. ROIC of 1.3% reflects management’s challenges in identifying attractive investment opportunities, and its decreasing returns suggest its historical profit centers are aging

PVH is trading at $82.68 per share, or 7x forward P/E. To fully understand why you should be careful with PVH, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

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 9 Market-Beating Stocks. 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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