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 is one small-cap stock that could be the next big thing and two best left ignored.
Two Small-Cap Stocks to Sell:
Teladoc (TDOC)
Market Cap: $1.23 billion
Founded to help people in rural areas get online medical consultations, Teladoc Health (NYSE: TDOC) is a telemedicine platform that facilitates remote doctor’s visits.
Why Does TDOC Fall Short?
- Annual revenue growth of 4.4% over the last three years was below our standards for the consumer internet sector
- Decision to emphasize platform growth over monetization has contributed to 7.1% annual declines in its average revenue per user
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
Teladoc is trading at $6.97 per share, or 4.2x forward EV/EBITDA. If you’re considering TDOC for your portfolio, see our FREE research report to learn more.
Steven Madden (SHOO)
Market Cap: $1.86 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 Are We Cautious About SHOO?
- Sales trends were unexciting over the last two years as its 9.4% annual growth was below the typical consumer discretionary company
- Poor free cash flow margin of 7.9% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Diminishing returns on capital suggest its earlier profit pools are drying up
Steven Madden’s stock price of $24.37 implies a valuation ratio of 15.5x forward P/E. Check out our free in-depth research report to learn more about why SHOO doesn’t pass our bar.
One Small-Cap Stock to Watch:
Wintrust Financial (WTFC)
Market Cap: $8.22 billion
Founded in 1991 as a community-focused alternative to big banks in the Chicago area, Wintrust Financial (NASDAQGS:WTFC) operates community banks in the Chicago area and provides specialty finance services including insurance premium financing and wealth management.
Why Are We Positive On WTFC?
- Market share has increased this cycle as its 15.4% annual net interest income growth over the last five years was exceptional
- Earnings per share grew by 5% annually over the last two years, massively outpacing its peers
- Balance sheet strength has increased this cycle as its 10.3% annual tangible book value per share growth over the last five years was exceptional
At $122.80 per share, Wintrust Financial trades at 1.2x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Trump’s April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. 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 Tecnoglass (+1,754% 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
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