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

Coty (COTY)

Market Cap: $2.77 billion

With a portfolio boasting many household brands, Coty (NYSE:COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.

Why Should You Sell COTY?

1. Core business is underperforming as its organic revenue has disappointed over the past one years, suggesting it might need acquisitions to stimulate growth
2. Efficiency has decreased over the last year as its operating margin fell by 6.3 percentage points
3. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

Coty’s stock price of $3.17 implies a valuation ratio of 6.9x forward P/E. Dive into our free research report to see why there are better opportunities than COTY.

JELD-WEN (JELD)

Market Cap: $232.4 million

Founded in the 1960s as a general wood-making company, JELD-WEN (NYSE:JELD) manufactures doors, windows, and other related building products.

Why Do We Think JELD Will Underperform?

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. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

At $2.72 per share, JELD-WEN trades at 11.1x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why JELD doesn’t pass our bar.

Neogen (NEOG)

Market Cap: $2.22 billion

Founded in 1981 and operating at the intersection of food safety and animal health, Neogen (NASDAQ:NEOG) develops and manufactures diagnostic tests and related products to detect dangerous substances in food and pharmaceuticals for animal health.

Why Do We Steer Clear of NEOG?

1. Sales tumbled by 2.1% annually over the last two years, showing market trends are working against its favor during this cycle
2. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
3. Negative earnings profile makes it challenging to secure favorable financing terms from lenders

Neogen is trading at $10.24 per share, or 36.7x forward P/E. If you’re considering NEOG for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.