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. Keeping that in mind, here is one small-cap stock that could be the next big thing and two that could be down big.
Two Small-Cap Stocks to Sell:
Albany (AIN)
Market Cap: $2.18 billion
Founded in 1895, Albany (NYSE: AIN) is a global textiles and materials processing company, specializing in machine clothing for paper mills and engineered composite structures for aerospace and other industries.
Why Do We Think AIN Will Underperform?
- Annual revenue growth of 3% over the last five years was below our standards for the industrials sector
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 9 percentage points
- Earnings per share fell by 6.3% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
At $72.23 per share, Albany trades at 11.6x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than AIN.
CBIZ (CBZ)
Market Cap: $3.94 billion
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE: CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
Why Does CBZ Worry Us?
- Free cash flow margin shrank by 10.2 percentage points over the last five years, suggesting the company stepped up its investments to maintain its competitive edge
- Underwhelming 10% return on capital reflects management’s difficulties in finding profitable growth opportunities
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
CBIZ’s stock price of $73.76 implies a valuation ratio of 19.3x forward P/E. Check out our free in-depth research report to learn more about why CBZ doesn’t pass our bar.
One Small-Cap Stock to Watch:
Impinj (PI)
Market Cap: $3.36 billion
Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ: PI) is a maker of radio-frequency identification (RFID) hardware and software.
Why Is PI Interesting?
- Market share has increased this cycle as its 11.9% annual revenue growth over the last two years was exceptional
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 38.1% outpaced its revenue gains
- Free cash flow margin expanded by 23.7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Impinj is trading at $115.86 per share, or 72.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
