3 Small-Cap Stocks That Fall Short

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.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.

Getty Images (GETY)

Market Cap: $896 million

With a vast library of over 562 million visual assets documenting everything from breaking news to iconic historical moments, Getty Images (NYSE:GETY) is a global visual content marketplace that licenses photos, videos, illustrations, and music to businesses, media outlets, and creative professionals.

Why Does GETY Give Us Pause?

1. Muted 1.3% annual revenue growth over the last two years shows its demand lagged behind its business services peers
2. Free cash flow margin dropped by 12 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Eroding returns on capital suggest its historical profit centers are aging

Getty Images is trading at $2.16 per share, or 3.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than GETY.

Kadant (KAI)

Market Cap: $3.28 billion

Headquartered in Massachusetts, Kadant (NYSE:KAI) is a global supplier of high-value, critical components and engineered systems used in process industries worldwide.

Why Does KAI Fall Short?

1. Annual revenue growth of 4.9% over the last two years was below our standards for the industrials sector
2. Flat earnings per share over the last two years lagged its peers
3. 2.7 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

Kadant’s stock price of $278.68 implies a valuation ratio of 29.5x forward P/E. If you’re considering KAI for your portfolio, see our FREE research report to learn more.

Hayward (HAYW)

Market Cap: $3.25 billion

Credited with introducing the first variable-speed pool pump, Hayward (NYSE:HAYW) makes residential and commercial pool equipment and accessories.

Why Do We Think Twice About HAYW?

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. Earnings per share have contracted by 30% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.9 percentage points

At $15.02 per share, Hayward trades at 19.5x forward P/E. Check out our free in-depth research report to learn more about why HAYW doesn’t pass our bar.

Stocks We Like More

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at 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-small-cap company Exlservice (+354% 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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