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.

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.

B&G Foods (BGS)

Market Cap: $445.5 million

Started as a small grocery store in New York City, B&G Foods (NYSE:BGS) is an American packaged foods company with a diverse portfolio of more than 50 brands.

Why Should You Sell BGS?

1. Products aren't resonating with the market as its revenue declined by 5.4% annually over the last three years

2. Issuance of new shares over the last three years caused its earnings per share to fall by 23.1% annually, even worse than its revenue declines

3. High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate

B&G Foods is trading at $5.55 per share, or 8.7x forward P/E. Read our free research report to see why you should think twice about including BGS in your portfolio, it’s free .

Edgewell Personal Care (EPC)

Market Cap: $1.05 billion

Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.

Why Should You Dump EPC?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth

2. Overall productivity fell over the last year as its plummeting sales were accompanied by a decline in its operating margin

3. 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

At $22.55 per share, Edgewell Personal Care trades at 10.4x forward P/E. To fully understand why you should be careful with EPC, check out our full research report (it’s free) .

NN (NNBR)

Market Cap: $116.4 million

Formerly known as Nuturn, NN (NASDAQ:NNBR) provides metal components, bearings, and plastic and rubber components to the automotive, aerospace, medical, and industrial sectors.

Why Do We Pass on NNBR?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years

2. Cash burn makes us question whether it can achieve sustainable long-term growth

3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value