3 Small-Cap Stocks Walking a Fine Line

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.

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. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.

Sprinklr (CXM)

Market Cap: $2.22 billion

Initially focused only on social media management, Sprinklr (NYSE: CXM) is a leading provider of unified customer experience management software.

Why Do We Avoid CXM?

1. Offerings struggled to generate meaningful interest as its average billings growth of 4% over the last year did not impress
2. Estimated sales growth of 3.4% for the next 12 months implies demand will slow from its three-year trend
3. Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 3.6 percentage points

Sprinklr is trading at $8.57 per share, or 2.6x forward price-to-sales. To fully understand why you should be careful with CXM, check out our full research report (it’s free).

Noodles (NDLS)

Market Cap: $40.45 million

Offering pasta, mac and cheese, pad thai, and more, Noodles & Company (NASDAQ:NDLS) is a casual restaurant chain that serves all manner of noodles from around the world.

Why Should You Sell NDLS?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

At $0.90 per share, Noodles trades at 1.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than NDLS.

Icahn Enterprises (IEP)

Market Cap: $4.52 billion

Founded in 1987, Icahn Enterprises (NASDAQ: IEP) is a diversified holding company primarily engaged in investment and asset management across various sectors.

Why Does IEP Worry Us?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 14.1% annually over the last two years
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. Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes

Icahn Enterprises’s stock price of $8.42 implies a valuation ratio of 0.4x forward price-to-sales. Read our free research report to see why you should think twice about including IEP in your portfolio.

High-Quality Stocks for All Market Conditions

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 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.