3 Small-Cap Stocks with Questionable Fundamentals

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.

Jamf (JAMF)

Market Cap: $1.50 billion

Founded in 2002 by Zach Halmstad and Chip Pearson, right around the time when Apple began to dominate the personal computing market, Jamf (NASDAQ:JAMF) provides software for companies to manage Apple devices such as Macs, iPads, and iPhones.

Why Are We Cautious About JAMF?

1. Offerings struggled to generate meaningful interest as its average billings growth of 9% over the last year did not impress
2. Persistent operating losses suggest the business manages its expenses poorly
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 3.5% for the last year

At $11.57 per share, Jamf trades at 2.2x forward price-to-sales. Read our free research report to see why you should think twice about including JAMF in your portfolio.

WideOpenWest (WOW)

Market Cap: $382.8 million

Initially started in Denver as a cable television provider, WideOpenWest (NYSE:WOW) provides high-speed internet, cable, and telephone services to the Midwest and Southeast regions of the U.S.

Why Do We Pass on WOW?

1. Number of subscribers has disappointed over the past two years, indicating weak demand for its offerings
2. Negative free cash flow raises questions about the return timeline for its investments
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

WideOpenWest’s stock price of $4.52 implies a valuation ratio of 1.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than WOW.

Lincoln Educational (LINC)

Market Cap: $545 million

Established in 1946, Lincoln Educational (NASDAQ:LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.

Why Are We Hesitant About LINC?

1. Performance surrounding its enrolled students has lagged its peers
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Eroding returns on capital suggest its historical profit centers are aging

Lincoln Educational is trading at $17.25 per share, or 10.4x forward EV-to-EBITDA. To fully understand why you should be careful with LINC, check out our full research report (it’s free).

Stocks That Overcame Trump’s 2018 Tariffs

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.