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.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. That said, here are three small-cap stocks to swipe left on and some alternatives you should look into instead.
USANA (USNA)
Market Cap: $345.9 million
Going to market with a direct selling model rather than through traditional retailers, USANA Health Sciences (NYSE: USNA) manufactures and sells nutritional, personal care, and skincare products.
Why Are We Hesitant About USNA?
- Products aren't resonating with the market as its revenue declined by 4.2% annually over the last three years
- Forecasted revenue decline of 1.4% for the upcoming 12 months implies demand will fall even further
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
USANA is trading at $18.93 per share, or 10.2x forward P/E. Dive into our free research report to see why there are better opportunities than USNA.
Amphastar Pharmaceuticals (AMPH)
Market Cap: $1.20 billion
Founded in 1996 and known for its expertise in complex drug formulations, Amphastar Pharmaceuticals (NASDAQ: AMPH) develops and manufactures technically challenging injectable and inhalation medications, including both generic and proprietary pharmaceutical products.
Why Does AMPH Give Us Pause?
- Smaller revenue base of $723.3 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Costs have risen faster than its revenue over the last two years, causing its adjusted operating margin to decline by 4.3 percentage points
At $26.02 per share, Amphastar Pharmaceuticals trades at 7.6x forward P/E. To fully understand why you should be careful with AMPH, check out our full research report (it’s free for active Edge members).
Sixth Street Specialty Lending (TSLX)
Market Cap: $1.96 billion
Originally launched as TPG Specialty Lending before rebranding in 2020, Sixth Street Specialty Lending (NYSE: TSLX) is a business development company that provides customized financing solutions to middle-market companies across various industries.
Why Do We Steer Clear of TSLX?
- Muted 5.4% annual revenue growth over the last two years shows its demand lagged behind its financials peers
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 3.3% annually
Sixth Street Specialty Lending’s stock price of $20.84 implies a valuation ratio of 3.3x forward price-to-sales. Check out our free in-depth research report to learn more about why TSLX doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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 244% over the last five years (as of June 30, 2025).
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 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
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