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.

Ameresco (AMRC)

Market Cap: $711.7 million

Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE:AMRC) provides energy and renewable energy solutions for various sectors.

Why Should You Sell AMRC?

1. Annual revenue growth of 6.1% over the last two years was below our standards for the industrials sector

2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Ameresco is trading at $13.53 per share, or 12.9x forward P/E. Check out our free in-depth research report to learn more about why AMRC doesn’t pass our bar.

Resideo (REZI)

Market Cap: $3.06 billion

Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.

Why Are We Cautious About REZI?

1. Sales trends were unexciting over the last two years as its 4.8% annual growth was below the typical industrials company

2. Estimated sales growth of 4.4% for the next 12 months is soft and implies weaker demand

3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $20.59 per share, Resideo trades at 5.1x forward EV-to-EBITDA. If you’re considering REZI for your portfolio, see our FREE research report to learn more.

Installed Building Products (IBP)

Market Cap: $4.36 billion

Founded in 1977, Installed Building Products (NYSE:IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.

Why Is IBP Not Exciting?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion

2. Estimated sales decline of 2.8% for the next 12 months implies a challenging demand environment

3. Earnings per share lagged its peers over the last two years as they only grew by 5.5% annually