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.
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.
Qualys (QLYS)
Market Cap: $3.93 billion
Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ:QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.
Why Are We Wary of QLYS?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 9.1% underwhelmed
- Estimated sales growth of 7.7% for the next 12 months implies demand will slow from its two-year trend
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
Qualys’s stock price of $111.54 implies a valuation ratio of 5.4x forward price-to-sales. Read our free research report to see why you should think twice about including QLYS in your portfolio.
World Kinect (WKC)
Market Cap: $1.53 billion
Serving over 150,000 customers from commercial jets to cargo ships to heating oil consumers, World Kinect (NYSE:WKC) procures and delivers fuel and energy products to airlines, shipping companies, trucking fleets, and industrial businesses worldwide.
Why Do We Avoid WKC?
- Gross margin of 2.3% reflects its high production costs and unfavorable asset base
- Low free cash flow margin of 0.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $29.73 per share, World Kinect trades at 0x forward price-to-sales. Check out our free in-depth research report to learn more about why WKC doesn’t pass our bar.
Atmus Filtration Technologies (ATMU)
Market Cap: $3.86 billion
Spun out of Cummins in 2023 after 65 years as part of the engine maker, Atmus Filtration Technologies (NYSE:ATMU) manufactures filters for trucks, construction equipment, and agriculture machinery to reduce emissions and protect engines.
Why Does ATMU Give Us Pause?
- Sales trends were unexciting over the last two years as its 5.6% annual growth was below the typical industrials company
- High input costs result in an inferior gross margin of 26.3% that must be offset through higher volumes
- Free cash flow margin has stayed in place over the last five years
Atmus Filtration Technologies is trading at $47.20 per share, or 1.9x forward price-to-sales. To fully understand why you should be careful with ATMU, check out our full research report (it’s free).
Stocks We Like More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.