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.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two best left ignored.
Two Small-Cap Stocks to Sell:
Boston Beer (SAM)
Market Cap: $2.67 billion
Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE: SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.
Why Are We Hesitant About SAM?
- Lackluster 1.7% annual revenue growth over the last three years indicates the company is losing ground to competitors
- Modest revenue base of $2.04 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
At $244.86 per share, Boston Beer trades at 24.2x forward P/E. Check out our free in-depth research report to learn more about why SAM doesn’t pass our bar.
ICU Medical (ICUI)
Market Cap: $3.52 billion
Founded in 1984 and named for its initial focus on intensive care units, ICU Medical (NASDAQ: ICUI) develops and manufactures medical products for infusion therapy, vascular access, and vital care applications used in hospitals and other healthcare settings.
Why Does ICUI Worry Us?
- Annual revenue growth of 2.2% over the last two years was below our standards for the healthcare sector
- Sales are projected to tank by 10.3% over the next 12 months as demand evaporates
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
ICU Medical’s stock price of $154.89 implies a valuation ratio of 19.8x forward P/E. Dive into our free research report to see why there are better opportunities than ICUI.
One Small-Cap Stock to Buy:
Hims & Hers Health (HIMS)
Market Cap: $11.5 billion
Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE: HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.
Why Is HIMS a Good Business?
- Customer growth averaged 48.6% over the past two years, showing its ability to "land" new contracts and potentially "expand" them later - a powerful one-two punch for sales
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 28.6% annually
- Free cash flow margin increased by 23.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Hims & Hers Health is trading at $50.68 per share, or 38.9x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
