3 Small-Cap Stocks Walking a Fine Line

Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.

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.

Dropbox (DBX)

Market Cap: $7.76 billion

Founded by the long-serving CEO Drew Houston and Arash Ferdowsi in 2007, Dropbox (NASDAQ:DBX) provides a file hosting cloud platform that helps organizations collaborate and share documents.

Why Are We Hesitant About DBX?

1. Billings didn’t grow over the last year, suggesting the company struggled to sell its software and might have to lower prices to stimulate growth
2. Sales are projected to tank by 2.7% over the next 12 months as demand evaporates
3. Efficiency has decreased over the last year as its operating margin fell by 3 percentage points

Dropbox’s stock price of $27.64 implies a valuation ratio of 3.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than DBX.

Mattel (MAT)

Market Cap: $6.64 billion

Known for the creation of iconic toys such as Barbie and Hotwheels, Mattel (NASDAQ:MAT) is a global children's entertainment company specializing in the design and production of consumer products.

Why Does MAT Fall Short?

1. Muted 1.8% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
2. Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $20.55 per share, Mattel trades at 12.4x forward P/E. If you’re considering MAT for your portfolio, see our FREE research report to learn more.

Columbia Financial (CLBK)

Market Cap: $1.59 billion

Founded during the Roaring Twenties in 1926 and headquartered in Fair Lawn, New Jersey, Columbia Financial (NASDAQ:CLBK) operates federally chartered savings banks in New Jersey that offer traditional banking services including loans, deposits, and insurance products.

Why Should You Sell CLBK?

1. Customers borrowered less money this cycle as its net interest income declined by 4.9% annually over the last four years
2. Net interest margin shrank by 94.7 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the yields on its loan book are decreasing or the market is becoming more competitive
3. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable

Columbia Financial is trading at $15.17 per share, or 1.4x forward P/B. Read our free research report to see why you should think twice about including CLBK in your portfolio.

Stocks We Like More

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 Growth Stocks for this month. 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