3 Small-Cap Stocks with Open Questions

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. That said, here are three small-cap stocks to avoid and some other investments you should consider instead.

Mohawk Industries (MHK)

Market Cap: $7.32 billion

Established in 1878, Mohawk Industries (NYSE:MHK) is a leading producer of floor-covering products for both residential and commercial applications.

Why Do We Think MHK Will Underperform?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Free cash flow margin is projected to show no improvement next year
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $118.39 per share, Mohawk Industries trades at 12.4x forward P/E. To fully understand why you should be careful with MHK, check out our full research report (it’s free).

Owens Corning (OC)

Market Cap: $9.85 billion

Credited with the discovery of fiberglass, Owens Corning (NYSE:OC) supplies building and construction materials to the United States and international markets.

Why Is OC Risky?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 13.6 percentage points
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Owens Corning is trading at $119.84 per share, or 12.3x forward P/E. Read our free research report to see why you should think twice about including OC in your portfolio.

Old Republic International (ORI)

Market Cap: $9.53 billion

Founded during the Roaring Twenties in 1923 and weathering nearly a century of economic cycles, Old Republic International (NYSE:ORI) is a diversified insurance holding company that provides property, liability, title, and mortgage guaranty insurance through its various subsidiaries.

Why Is ORI Not Exciting?

1. 4.4% annualized net premiums earned growth over the last five years lagged behind its insurance peers
2. Earnings per share lagged its peers over the last two years as they only grew by 9.4% annually
3. Muted 1.5% annual book value per share growth over the last two years shows its capital generation lagged behind its insurance peers

Old Republic International’s stock price of $39.14 implies a valuation ratio of 1.6x forward P/B. If you’re considering ORI for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.