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.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. Keeping that in mind, here are three small-cap stocks to pass on and some alternatives you should look into instead.
Upland Software (UPLD)
Market Cap: $13.27 million
Operating under the mantra "land and expand," Upland Software (NASDAQ:UPLD) provides cloud-based applications that help organizations manage projects, workflows, and digital transformation across various business functions.
Why Should You Sell UPLD?
- Offerings couldn’t generate interest over the last year as its billings have averaged 25.1% declines
- Forecasted revenue decline of 2.2% for the upcoming 12 months implies demand will fall even further
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
Upland Software’s stock price of $4.62 implies a valuation ratio of 0.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than UPLD.
Offerpad (OPAD)
Market Cap: $18.55 million
Known for giving homeowners cash offers within 24 hours, Offerpad (NYSE:OPAD) operates a tech-enabled platform specializing in direct home buying and selling solutions.
Why Do We Pass on OPAD?
- Performance surrounding its homes sold has lagged its peers
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes
Offerpad is trading at $3.87 per share, or 0x forward price-to-sales. Read our free research report to see why you should think twice about including OPAD in your portfolio.
Artivion (AORT)
Market Cap: $1.34 billion
Formerly known as CryoLife until its 2022 rebranding, Artivion (NYSE:AORT) develops and manufactures medical devices and preserves human tissues used in cardiac and vascular surgical procedures for patients with aortic disease.
Why Does AORT Fall Short?
- Smaller revenue base of $458.7 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Low free cash flow margin of -0.7% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Underwhelming 2.7% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $27.30 per share, Artivion trades at 57.9x forward P/E. If you’re considering AORT for your portfolio, see our FREE research report to learn more.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.