3 Small-Cap Stocks That Concern Us

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.

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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.

nCino (NCNO)

Market Cap: $2.83 billion

Born from the internal technology needs of a community bank in 2011, nCino (NASDAQ:NCNO) provides cloud-based software that helps financial institutions streamline client onboarding, loan origination, and account opening processes.

Why Are We Out on NCNO?

1. Average billings growth of 14.6% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Estimated sales growth of 6.1% for the next 12 months implies demand will slow from its two-year trend
3. Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 60.3%

nCino’s stock price of $25.15 implies a valuation ratio of 4.8x forward price-to-sales. Check out our free in-depth research report to learn more about why NCNO doesn’t pass our bar.

Freshpet (FRPT)

Market Cap: $2.94 billion

Standing out from typical processed pet foods, Freshpet (NASDAQ:FRPT) is a pet food company whose product portfolio includes natural meals and treats for dogs and cats.

Why Is FRPT Not Exciting?

1. Subscale operations are evident in its revenue base of $1.08 billion, meaning it has fewer distribution channels than its larger rivals
2. Cash-burning history makes us doubt the long-term viability of its business model
3. ROIC of -0.8% reflects management’s challenges in identifying attractive investment opportunities

Freshpet is trading at $59.58 per share, or 41.9x forward P/E. Read our free research report to see why you should think twice about including FRPT in your portfolio.

WillScot Mobile Mini (WSC)

Market Cap: $3.54 billion

Originally focusing on mobile offices for construction sites, WillScot (NASDAQ:WSC) provides ready-to-use temporary spaces, largely for longer-term lease.

Why Are We Cautious About WSC?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Estimated sales decline of 5.3% for the next 12 months implies an even more challenging demand environment
3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

At $19.56 per share, WillScot Mobile Mini trades at 17.8x forward P/E. Dive into our free research report to see why there are better opportunities than WSC.

Stocks We Like More

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 (+1,326% between June 2020 and June 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.