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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 swipe left on and some alternatives you should look into instead.

USANA (USNA)

Market Cap: $631.1 million

Going to market with a direct selling model rather than through traditional retailers, USANA Health Sciences (NYSE:USNA) manufactures and sells nutritional, personal care, and skincare products.

Why Are We Hesitant About USNA?

1. Sales tumbled by 10.4% annually over the last three years, showing consumer trends are working against its favor

2. Smaller revenue base of $854.5 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy

3. Sales were less profitable over the last three years as its earnings per share fell by 23.1% annually, worse than its revenue declines

USANA’s stock price of $32.43 implies a valuation ratio of 11.5x forward price-to-earnings. Read our free research report to see why you should think twice about including USNA in your portfolio, it’s free.

Paramount (PARA)

Market Cap: $8.15 billion

Owner of Spongebob Squarepants and formerly known as ViacomCBS, Paramount Global (NASDAQ:PARA) is a major media conglomerate offering television, film production, and digital content across various global platforms.

Why Is PARA Risky?

1. Products and services have few die-hard fans as sales have declined by 1.6% annually over the last two years

2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 20.5% annually

3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $11.38 per share, Paramount trades at 7.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than PARA.

U.S. Physical Therapy (USPH)

Market Cap: $1.21 billion

Founded in 1990 with just six clinics, U.S. Physical Therapy (NYSE:USPH) operates outpatient physical therapy clinics across the country, offering rehabilitation services for orthopedic injuries, post-surgical recovery, and chronic pain management.

Why Does USPH Fall Short?

1. 6.9% annual revenue growth over the last five years was slower than its healthcare peers

2. Revenue base of $671.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale

3. Earnings per share fell by 2.9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable