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.
Tenable (TENB)
Market Cap: $2.71 billion
Starting with the widely-used Nessus vulnerability scanner first released in 1998, Tenable (NASDAQ:TENB) provides exposure management solutions that help organizations identify, assess, and prioritize cybersecurity vulnerabilities across their IT infrastructure and cloud environments.
Why Are We Hesitant About TENB?
- Products, pricing, or go-to-market strategy may need some adjustments as its 8.7% average billings growth over the last year was weak
- Estimated sales growth of 7.1% for the next 12 months implies demand will slow from its two-year trend
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
Tenable’s stock price of $22.91 implies a valuation ratio of 2.4x forward price-to-sales. If you’re considering TENB for your portfolio, see our FREE research report to learn more.
RadNet (RDNT)
Market Cap: $5.42 billion
With over 350 imaging facilities across seven states and a growing artificial intelligence division, RadNet (NASDAQ:RDNT) operates a network of outpatient diagnostic imaging centers across the United States, offering services like MRI, CT scans, PET scans, mammography, and X-rays.
Why Does RDNT Worry Us?
- Smaller revenue base of $1.97 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 3.5 percentage points
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $70.11 per share, RadNet trades at 104.1x forward P/E. Read our free research report to see why you should think twice about including RDNT in your portfolio.
Eastern Bank (EBC)
Market Cap: $4.87 billion
Founded in 1818 as one of America's oldest mutual banks before converting to a public company in 2020, Eastern Bankshares (NASDAQ:EBC) operates as a bank holding company providing commercial and retail banking services primarily in Massachusetts, New Hampshire, and Rhode Island.
Why Are We Wary of EBC?
- Net interest margin of 3.2% is well below other banks, signaling its loans aren’t very profitable
- Annual tangible book value per share declines of 4.5% for the past five years show its capital management struggled during this cycle
- Tangible book value per share is projected to be flat over the next 12 months and implies weak profitability
Eastern Bank is trading at $21.57 per share, or 1.1x forward P/B. Check out our free in-depth research report to learn more about why EBC doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.