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.
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 is one small-cap stock that could be the next 100 bagger and two that may have trouble.
Two Small-Cap Stocks to Sell:
Amtech (ASYS)
Market Cap: $49.81 million
Focusing on the silicon carbide and power semiconductor sectors, Amtech Systems (NASDAQ: ASYS) produces the machinery and related chemicals needed for manufacturing semiconductors.
Why Do We Think ASYS Will Underperform?
- Sales tumbled by 7.9% annually over the last two years, showing market trends are working against its favor during this cycle
- Persistent operating losses suggest the business manages its expenses poorly
- Negative returns on capital show that some of its growth strategies have backfired, and its shrinking returns suggest its past profit sources are losing steam
Amtech’s stock price of $3.51 implies a valuation ratio of 13.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than ASYS.
MGP Ingredients (MGPI)
Market Cap: $691.8 million
Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ: MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry
Why Should You Sell MGPI?
- Annual sales declines of 2.8% for the past three years show its products struggled to connect with the market
- Forecasted revenue decline of 19.8% for the upcoming 12 months implies demand will fall even further
- Inability to adjust its cost structure while its revenue declined over the last year led to a 10 percentage point drop in the company’s operating margin
At $32.52 per share, MGP Ingredients trades at 12.2x forward P/E. To fully understand why you should be careful with MGPI, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
Granite Construction (GVA)
Market Cap: $3.76 billion
Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE: GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.
Why Are We Fans of GVA?
- Market share has increased this cycle as its 12.2% annual revenue growth over the last two years was exceptional
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 48.5% annually
- Improving returns on capital suggest its past investments are beginning to deliver value
Granite Construction is trading at $88 per share, or 8x forward EV-to-EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.
