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 are two small-cap stocks that could be the next 100 baggers and one that may have trouble.
One Small-Cap Stock to Sell:
The Toro Company (TTC)
Market Cap: $7.20 billion
Ceasing all production to support the war effort during World War II, Toro (NYSE: TTC) offers outdoor equipment for residential, commercial, and agricultural use.
Why Should You Dump TTC?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.4% annually over the last two years
- Free cash flow margin dropped by 5.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital imply its previous profit engines are losing steam
At $73.01 per share, The Toro Company trades at 16.1x forward P/E. Check out our free in-depth research report to learn more about why TTC doesn’t pass our bar.
Two Small-Cap Stocks to Watch:
TTM Technologies (TTMI)
Market Cap: $7.04 billion
As one of the world's largest printed circuit board manufacturers with facilities spanning North America and Asia, TTM Technologies (NASDAQ: TTMI) manufactures printed circuit boards (PCBs) and radio frequency (RF) components for aerospace, defense, automotive, and telecommunications industries.
Why Are We Fans of TTMI?
- Market share has increased this cycle as its 10.5% annual revenue growth over the last two years was exceptional
- Projected revenue growth of 11.2% for the next 12 months suggests its momentum from the last two years will persist
- Earnings per share grew by 32.4% annually over the last two years, massively outpacing its peers
TTM Technologies is trading at $66.25 per share, or 24.7x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Skyward Specialty Insurance (SKWD)
Market Cap: $1.85 billion
Founded in 2006 to serve markets where standard insurance coverage falls short, Skyward Specialty Insurance (NASDAQ: SKWD) provides customized commercial property, casualty, and health insurance solutions for underserved or specialized market niches.
Why Is SKWD a Top Pick?
- Market penetration was impressive this cycle as its net premiums earned expanded by 26.6% annually over the last two years
- Annual book value per share growth of 29.3% over the last two years was superb and indicates its capital strength increased during this cycle
- Capital strength will likely rise over the next 12 months as its expected book value per share growth of 22.6% is robust
Skyward Specialty Insurance’s stock price of $47.25 implies a valuation ratio of 1.9x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at 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 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-small-cap company Comfort Systems (+782% 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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