3 Small-Cap Stocks That Concern Us

Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.

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.

Commvault (CVLT)

Market Cap: $5.23 billion

Born from the need to create ironclad protection in an increasingly dangerous digital world, Commvault (NASDAQ:CVLT) provides data protection and cyber resilience software that helps organizations secure, back up, and recover their data across on-premises, hybrid, and multi-cloud environments.

Why Are We Wary of CVLT?

1. Revenue increased by 10.3% annually over the last five years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
2. Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
3. Operating margin dropped by 1.2 percentage points over the last year as the company focused on expansion rather than profitability

At $135.38 per share, Commvault trades at 4.3x forward price-to-sales. Check out our free in-depth research report to learn more about why CVLT doesn’t pass our bar.

Acushnet (GOLF)

Market Cap: $5.82 billion

Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE:GOLF) is a design and manufacturing company specializing in performance-driven golf products.

Why Are We Out on GOLF?

1. Annual revenue growth of 7.9% over the last five years was below our standards for the consumer discretionary sector
2. Poor free cash flow margin of 4.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Acushnet’s stock price of $112.41 implies a valuation ratio of 27.2x forward P/E. If you’re considering GOLF for your portfolio, see our FREE research report to learn more.

Merit Medical Systems (MMSI)

Market Cap: $3.99 billion

Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ:MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.

Why Do We Think Twice About MMSI?

1. Revenue base of $1.54 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. ROIC of 5.2% reflects management’s challenges in identifying attractive investment opportunities

Merit Medical Systems is trading at $70.84 per share, or 16.9x forward P/E. Dive into our free research report to see why there are better opportunities than MMSI.

High-Quality Stocks for All Market Conditions

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.

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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.