3 Small-Cap Stocks with Open Questions

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.

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 avoid and some other investments you should consider instead.

Teladoc (TDOC)

Market Cap: $1.19 billion

Founded to help people in rural areas get online medical consultations, Teladoc Health (NYSE:TDOC) is a telemedicine platform that facilitates remote doctor’s visits.

Why Are We Wary of TDOC?

1. Sales stagnated over the last three years and signal the need for new growth strategies
2. Customer spending has dipped by 9% on average as it focused on growing its users
3. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue

Teladoc is trading at $6.61 per share, or 5.2x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than TDOC.

American Express Global Business Travel (GBTG)

Market Cap: $4.88 billion

Originally spun off from American Express in 2014 but maintaining the Amex GBT brand, Global Business Travel Group (NYSE:GBTG) provides end-to-end business travel and expense management solutions, connecting corporate clients with travel suppliers and offering specialized software services.

Why Are We Hesitant About GBTG?

1. Sales trends were unexciting over the last two years as its 12.5% annual growth was below the typical software company
2. Sky-high servicing costs result in an inferior gross margin of 59% that must be offset through increased usage
3. Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 3.7 percentage points

American Express Global Business Travel’s stock price of $9.36 implies a valuation ratio of 1.5x forward price-to-sales. To fully understand why you should be careful with GBTG, check out our full research report (it’s free).

Clean Energy Fuels (CLNE)

Market Cap: $451.5 million

Operating the largest network of natural gas fueling stations in North America with over 600 locations, Clean Energy Fuels (NASDAQ:CLNE) supplies renewable natural gas and conventional natural gas as fuel for commercial vehicle fleets.

Why Do We Steer Clear of CLNE?

1. 9.2% annual revenue growth over the last five years was slower than its energy upstream and integrated energy peers
2. Revenue base of $438.6 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Costly operations and weak unit economics result in an inferior gross margin of 24.4% that must be offset through higher production volumes

At $2.06 per share, Clean Energy Fuels trades at 7.9x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than CLNE.

Stocks We Like More

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

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.