3 Small-Cap Stocks That Concern Us

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.

These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.

RingCentral (RNG)

Market Cap: $3.18 billion

Built on its proprietary Message Video Phone (MVP) platform that unifies multiple communication methods, RingCentral (NYSE:RNG) provides AI-driven cloud communications and collaboration solutions that enable businesses to connect through voice, video, messaging, and contact center services.

Why Do We Avoid RNG?

1. Customers had second thoughts about committing to its platform over the last year as its average billings growth of 3.8% underwhelmed
2. Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its two-year trend
3. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment

RingCentral’s stock price of $36.50 implies a valuation ratio of 1.2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than RNG.

UFP Technologies (UFPT)

Market Cap: $1.66 billion

With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ:UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.

Why Do We Think Twice About UFPT?

1. Smaller revenue base of $602.8 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy

At $215.94 per share, UFP Technologies trades at 24.1x forward P/E. Check out our free in-depth research report to learn more about why UFPT doesn’t pass our bar.

StoneX (SNEX)

Market Cap: $6.87 billion

Originally known as INTL FCStone until its 2020 rebranding, StoneX Group (NASDAQ:SNEX) provides a global financial services network connecting companies, traders, and investors to markets through clearing, execution, and advisory services.

Why Are We Cautious About SNEX?

1. Incremental sales over the last five years were less profitable as its 1.7% annual earnings per share growth lagged its revenue gains
2. Large asset base makes it harder to grow tangible book value per share quickly, and its annual tangible book value per share growth of 6.6% over the last two years was below our standards for the financials sector
3. Debt-to-equity ratio of 7.8× shows the firm has taken on excessive debt, leaving little room for error

StoneX is trading at $130.92 per share, or 2.3x forward P/E. To fully understand why you should be careful with SNEX, check out our full research report (it’s free).

Stocks We Like More

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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.