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.
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.
RH (RH)
Market Cap: $4.34 billion
Formerly known as Restoration Hardware, RH (NYSE:RH) is a specialty retailer that exclusively sells its own brand of high-end furniture and home decor.
Why Do We Think Twice About RH?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Earnings per share have dipped by 38.3% annually over the past three years, which is concerning because stock prices follow EPS over the long term
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $229.88 per share, RH trades at 24.8x forward P/E. Read our free research report to see why you should think twice about including RH in your portfolio.
THOR Industries (THO)
Market Cap: $6.23 billion
Created through the acquisition and merger of various RV manufacturers, THOR Industries manufactures and sells a range of recreational vehicles, including motorhomes and travel trailers, catering to consumers seeking the freedom and comfort of the RV lifestyle.
Why Is THO Risky?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.3% annually over the last two years
- Earnings per share have dipped by 1.2% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
THOR Industries’s stock price of $117.95 implies a valuation ratio of 26.1x forward P/E. To fully understand why you should be careful with THO, check out our full research report (it’s free).
Avantor (AVTR)
Market Cap: $8.35 billion
With roots dating back to 1904 and embedded in virtually every stage of scientific research and production, Avantor (NYSE:AVTR) provides mission-critical products, materials, and services to customers in biopharma, healthcare, education, and advanced technology industries.
Why Is AVTR Not Exciting?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Avantor is trading at $12.36 per share, or 13.8x forward P/E. If you’re considering AVTR for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. 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).
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