3 Small-Cap Stocks in Hot Water

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

Zevia (ZVIA)

Market Cap: $147.5 million

With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE:ZVIA) is a better-for-you beverage company.

Why Do We Think Twice About ZVIA?

1. Muted 3.9% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
2. Revenue base of $155 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Poor expense management has led to operating losses

Zevia’s stock price of $2.47 implies a valuation ratio of 0.9x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ZVIA.

EnerSys (ENS)

Market Cap: $3.24 billion

Supplying batteries that power equipment as big as mining rigs, EnerSys (NYSE:ENS) manufactures various kinds of batteries for a range of industries.

Why Does ENS Worry Us?

1. Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
2. Gross margin of 25.3% is below its competitors, leaving less money to invest in areas like marketing and R&D
3. 4.6 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

At $82.91 per share, EnerSys trades at 8.6x forward price-to-earnings. Read our free research report to see why you should think twice about including ENS in your portfolio.

3D Systems (DDD)

Market Cap: $242.6 million

Founded by the inventor of stereolithography, 3D Systems (NYSE:DDD) engineers, manufactures, and sells 3D printers and other related products to the aerospace, automotive, healthcare, and consumer goods industries.

Why Do We Pass on DDD?

1. Annual sales declines of 7% for the past five years show its products and services struggled to connect with the market during this cycle
2. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

3D Systems is trading at $1.87 per share, or 0.6x forward price-to-sales. If you’re considering DDD for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.