3 Small-Cap Stocks We're Skeptical Of

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.

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.

Energizer (ENR)

Market Cap: $1.66 billion

Masterminds behind the viral Energizer Bunny mascot, Energizer (NYSE:ENR) is one of the world's largest manufacturers of batteries.

Why Does ENR Fall Short?

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. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.4%
3. Free cash flow margin dropped by 3.9 percentage points over the last year, implying the company became more capital intensive as competition picked up

Energizer’s stock price of $24.38 implies a valuation ratio of 7x forward P/E. Read our free research report to see why you should think twice about including ENR in your portfolio.

Redwire (RDW)

Market Cap: $986 million

Based in Jacksonville, Florida, Redwire (NYSE:RDW) is a provider of systems and components used in space infrastructure.

Why Do We Think RDW Will Underperform?

1. Historically negative EPS raises concerns for risk-averse investors and makes its earnings potential harder to gauge
2. Free cash flow margin shrank by 14.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

At $6.01 per share, Redwire trades at 28.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why RDW doesn’t pass our bar.

First Interstate BancSystem (FIBK)

Market Cap: $3.34 billion

Tracing its roots back to 1971 and still guided by founding family principles, First Interstate BancSystem (NASDAQ:FIBK) operates a network of community banks across 14 western and midwestern states, offering comprehensive banking services to individuals, businesses, and government entities.

Why Do We Steer Clear of FIBK?

1. Annual sales declines of 3.1% for the past two years show its products and services struggled to connect with the market during this cycle
2. Projected net interest income decline of 1.4% for the next 12 months points to a tough demand environment ahead
3. Annual tangible book value per share growth of 1.3% over the last five years was below our standards for the banking sector

First Interstate BancSystem is trading at $32.63 per share, or 1x forward P/B. Dive into our free research report to see why there are better opportunities than FIBK.

High-Quality Stocks for All Market Conditions

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. 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 244% over the last five years (as of June 30, 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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