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.
Papa John's (PZZA)
Market Cap: $1.06 billion
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Why Do We Pass on PZZA?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Estimated sales decline of 5.5% for the next 12 months implies a challenging demand environment
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 2.9 percentage points
At $35.91 per share, Papa John's trades at 20.3x forward P/E. If you’re considering PZZA for your portfolio, see our FREE research report to learn more.
Vail Resorts (MTN)
Market Cap: $4.86 billion
Founded by two Aspen, Colorado ski patrol guides, Vail Resorts (NYSE: MTN) is a mountain resort company offering luxury experiences in over 30 locations across the globe.
Why Are We Out on MTN?
- Demand for its offerings was relatively low as its number of skier visits has underwhelmed
- Poor free cash flow margin of 9.9% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
Vail Resorts is trading at $129.87 per share, or 21.2x forward P/E. Check out our free in-depth research report to learn more about why MTN doesn’t pass our bar.
RadNet (RDNT)
Market Cap: $4.58 billion
With over 350 imaging facilities across seven states and a growing artificial intelligence division, RadNet (NASDAQ: RDNT) operates a network of outpatient diagnostic imaging centers across the United States, offering services like MRI, CT scans, PET scans, mammography, and X-rays.
Why Are We Hesitant About RDNT?
- Smaller revenue base of $2.14 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Free cash flow margin dropped by 10.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its decreasing returns suggest its historical profit centers are aging
RadNet’s stock price of $52.90 implies a valuation ratio of 77.4x forward P/E. Dive into our free research report to see why there are better opportunities than RDNT.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
