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 are three small-cap stocks to avoid and some other investments you should consider instead.
Apogee (APOG)
Market Cap: $816.6 million
Involved in the design of the Apple Store on Fifth Avenue in New York City, Apogee (NASDAQ: APOG) sells architectural products and services such as high-performance glass for commercial buildings.
Why Is APOG Risky?
- Sales tumbled by 1.3% annually over the last two years, showing market trends are working against its favor during this cycle
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1%
- Earnings per share have contracted by 8.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Apogee is trading at $37.98 per share, or 9.3x forward P/E. Check out our free in-depth research report to learn more about why APOG doesn’t pass our bar.
Great Lakes Dredge & Dock (GLDD)
Market Cap: $889.6 million
Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ: GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.
Why Are We Wary of GLDD?
- Backlog growth averaged a weak 4.2% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
- Gross margin of 16.9% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $13.36 per share, Great Lakes Dredge & Dock trades at 14.4x forward P/E. Read our free research report to see why you should think twice about including GLDD in your portfolio.
FirstSun Capital Bancorp (FSUN)
Market Cap: $1.07 billion
Tracing its roots back to 1892 when it first opened its doors in Kansas, FirstSun Capital Bancorp (NASDAQ: FSUN) operates Sunflower Bank, providing commercial and consumer banking services to businesses and individuals across the Southwest region.
Why Does FSUN Give Us Pause?
- Annual revenue growth of 3.7% over the last two years was below our standards for the banking sector
- Net interest margin shrank by 23.3 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive
- Projected tangible book value per share decline of 4% for the next 12 months points to tough credit quality challenges ahead
FirstSun Capital Bancorp’s stock price of $38.40 implies a valuation ratio of 0.9x forward P/B. To fully understand why you should be careful with FSUN, check out our full research report (it’s free for active Edge members).
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
