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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.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are three small-cap stocks to avoid and some other investments you should consider instead.

Asure (ASUR)

Market Cap: $258.5 million

Created from the merger of two small workforce management companies in 2007, Asure (NASDAQ:ASUR) provides cloud based payroll and HR software for small and medium-sized businesses (SMBs).

Why Is ASUR Not Exciting?

1. Annual revenue growth of 15.1% over the last three years was below our standards for the software sector

2. Customers had second thoughts about committing to its platform over the last year as its average billings growth of 7.9% underwhelmed

3. Efficiency has decreased over the last year as its operating margin fell by 5.4 percentage points

At $9.52 per share, Asure trades at 1.9x forward price-to-sales. Check out our free in-depth research report to learn more about why ASUR doesn’t pass our bar.

Steven Madden (SHOO)

Market Cap: $1.79 billion

As seen in the infamous Wolf of Wall Street movie, Steven Madden (NASDAQ:SHOO) is a fashion brand famous for its trendy and innovative footwear, appealing to a young and style-conscious audience.

Why Does SHOO Give Us Pause?

1. 5.7% annual revenue growth over the last five years was slower than its consumer discretionary peers

2. Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 9.2% annually

3. Free cash flow margin is forecasted to shrink by 2.6 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors

Steven Madden’s stock price of $25.66 implies a valuation ratio of 12.9x forward P/E. To fully understand why you should be careful with SHOO, check out our full research report (it’s free).

Landstar (LSTR)

Market Cap: $4.86 billion

Covering billions of miles throughout North America, Landstar (NASDAQ:LSTR) is a transportation company specializing in freight and last-mile delivery services.

Why Do We Avoid LSTR?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 16.5% annually over the last two years

2. Flat earnings per share over the last five years lagged its peers

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