3 Small-Cap Stocks in Hot Water

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. 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: $204.8 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 Does ZVIA Give Us Pause?

1. Annual revenue growth of 2% over the last three years was below our standards for the consumer staples sector
2. Revenue growth over the past three years was nullified by the company’s new share issuances as its earnings per share fell by 27.1% annually
3. Negative free cash flow raises questions about the return timeline for its investments

Zevia is trading at $3.10 per share, or 1.5x forward price-to-sales. Check out our free in-depth research report to learn more about why ZVIA doesn’t pass our bar.

Ryder (R)

Market Cap: $6.21 billion

As one of the first companies to introduce the idea of leasing trucks, Ryder (NYSE:R) provides rental vehicles to businesses and delivers packages directly to homes or businesses.

Why Should You Sell R?

1. Sizable revenue base leads to growth challenges as its 2.3% annual revenue increases over the last two years fell short of other industrials companies
2. Earnings per share have contracted by 11% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. 14.1 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 $150.21 per share, Ryder trades at 11.2x forward P/E. Dive into our free research report to see why there are better opportunities than R.

Pediatrix Medical Group (MD)

Market Cap: $1.11 billion

With a network of approximately 2,620 affiliated physicians caring for some of the most vulnerable patients, Pediatrix Medical Group (NYSE:MD) provides specialized physician services focused on neonatal, maternal-fetal, pediatric cardiology and other pediatric subspecialty care across 37 states.

Why Do We Think MD Will Underperform?

1. Lagging comparable store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 1.8% annually while its revenue grew
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Pediatrix Medical Group’s stock price of $13.22 implies a valuation ratio of 8.5x forward P/E. If you’re considering MD for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. 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 Kadant (+351% 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