3 Small-Cap Stocks Showing Warning Signs

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.

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.

Spectrum Brands (SPB)

Market Cap: $1.30 billion

A leader in multiple consumer product categories, Spectrum Brands (NYSE:SPB) is a diversified company with a portfolio of trusted brands spanning home appliances, garden care, personal care, and pet care.

Why Should You Sell SPB?

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. Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Cash-burning history makes us doubt the long-term viability of its business model

Spectrum Brands is trading at $52.85 per share, or 10x forward P/E. Dive into our free research report to see why there are better opportunities than SPB.

Oxford Industries (OXM)

Market Cap: $593.7 million

The parent company of Tommy Bahama, Oxford Industries (NYSE:OXM) is a lifestyle fashion conglomerate with brands that embody outdoor happiness.

Why Do We Avoid OXM?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Oxford Industries’s stock price of $39.67 implies a valuation ratio of 8.8x forward P/E. Read our free research report to see why you should think twice about including OXM in your portfolio.

Interface (TILE)

Market Cap: $1.24 billion

Pioneering carbon-neutral flooring since its founding in 1973, Interface (NASDAQ:TILE) is a global manufacturer of modular carpet tiles, luxury vinyl tile (LVT), and rubber flooring that specializes in carbon-neutral and sustainable flooring solutions.

Why Do We Think TILE Will Underperform?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 3.5% annually
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $21.08 per share, Interface trades at 7.7x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why TILE doesn’t pass our bar.

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 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-small-cap company Exlservice (+354% 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