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. Keeping that in mind, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
Manhattan Associates (MANH)
Market Cap: $7.37 billion
Built on a "versionless" cloud architecture that delivers quarterly updates to all customers, Manhattan Associates (NASDAQ: MANH) develops cloud-based software that helps retailers, wholesalers, and manufacturers manage their supply chains, inventory, and omnichannel operations.
Why Is MANH Not Exciting?
- Products, pricing, or go-to-market strategy may need some adjustments as its 4.1% average billings growth over the last year was weak
- Gross margin of 56.3% reflects its high servicing costs
- Operating margin didn’t move over the last year, showing it couldn’t increase its efficiency
At $124.47 per share, Manhattan Associates trades at 7.1x forward price-to-sales. Read our free research report to see why you should think twice about including MANH in your portfolio.
Grand Canyon Education (LOPE)
Market Cap: $4.50 billion
Founded in 1949, Grand Canyon Education (NASDAQ: LOPE) is an educational services provider known for its operation at Grand Canyon University.
Why Do We Pass on LOPE?
- Performance surrounding its students has lagged its peers
- Earnings per share lagged its peers over the last five years as they only grew by 7.2% annually
- Free cash flow margin is expected to remain in place over the coming year
Grand Canyon Education is trading at $167.99 per share, or 17x forward P/E. Dive into our free research report to see why there are better opportunities than LOPE.
Renasant (RNST)
Market Cap: $3.69 billion
Founded in 1904 during a time when the South was rebuilding its economy, Renasant (NYSE: RNST) is a regional bank holding company that offers banking, wealth management, insurance, and specialized lending services throughout the Southeast.
Why Are We Hesitant About RNST?
- Annual revenue growth of 8.1% over the last five years was below our standards for the banking sector
- Earnings per share fell by 2.1% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- 3.7% annual tangible book value per share growth over the last two years was slower than its banking peers
Renasant’s stock price of $39.73 implies a valuation ratio of 0.9x forward P/B. To fully understand why you should be careful with RNST, check out our full research report (it’s free).
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
