Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
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.
Steven Madden (SHOO)
Market Cap: $3.03 billion
As seen in the infamous Wolf of Wall Street movie, Steven Madden (NASDAQ: SHOO) is a fashion brand famous for its trendy and innovative footwear, appealing to a young and style-conscious audience.
Why Should You Dump SHOO?
- Lackluster 13.2% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Steven Madden is trading at $41.71 per share, or 21.1x forward P/E. To fully understand why you should be careful with SHOO, check out our full research report (it’s free for active Edge members).
Allison Transmission (ALSN)
Market Cap: $7.43 billion
Helping build race cars at one point, Allison Transmission (NYSE: ALSN) offers transmissions to original equipment manufacturers and fleet operators.
Why Does ALSN Give Us Pause?
- Muted 1.5% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Forecasted revenue decline of 4.8% for the upcoming 12 months implies demand will fall off a cliff
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 6.3% annually
At $88.69 per share, Allison Transmission trades at 12.4x forward P/E. If you’re considering ALSN for your portfolio, see our FREE research report to learn more.
Northwest Bancshares (NWBI)
Market Cap: $1.79 billion
Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ: NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.
Why Do We Pass on NWBI?
- Annual net interest income growth of 5.7% over the last five years was below our standards for the banking sector
- Incremental sales over the last two years were less profitable as its 2.5% annual earnings per share growth lagged its revenue gains
- Capital trends were unexciting over the last five years as its 1% annual tangible book value per share growth was below the typical banking firm
Northwest Bancshares’s stock price of $12.25 implies a valuation ratio of 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than NWBI.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 Comfort Systems (+782% 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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