3 Small-Cap Stocks Facing Headwinds

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 swipe left on and some alternatives you should look into instead.

Steelcase (SCS)

Market Cap: $1.13 billion

Founded in 1912 when metal office furniture was replacing wooden alternatives, Steelcase (NYSE:SCS) is a global office furniture manufacturer that designs and produces workplace solutions including desks, chairs, architectural products, and services.

Why Is SCS Risky?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.2% annually over the last five years
2. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
3. ROIC of 6.4% reflects management’s challenges in identifying attractive investment opportunities

At $9.87 per share, Steelcase trades at 9.1x forward P/E. Dive into our free research report to see why there are better opportunities than SCS.

Hayward (HAYW)

Market Cap: $2.99 billion

Credited with introducing the first variable-speed pool pump, Hayward (NYSE:HAYW) makes residential and commercial pool equipment and accessories.

Why Do We Steer Clear of HAYW?

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. Issuance of new shares over the last five years caused its earnings per share to fall by 58.1% annually while its revenue grew
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Hayward’s stock price of $13.82 implies a valuation ratio of 18.2x forward P/E. Check out our free in-depth research report to learn more about why HAYW doesn’t pass our bar.

Amneal (AMRX)

Market Cap: $2.25 billion

Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ:AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.

Why Is AMRX Not Exciting?

1. Free cash flow margin dropped by 12.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
2. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Amneal is trading at $7.05 per share, or 10.3x forward P/E. Read our free research report to see why you should think twice about including AMRX in your portfolio.

Stocks That Overcame Trump’s 2018 Tariffs

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 6 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.