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.
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. Keeping that in mind, here is one small-cap stock that could be the next big thing and two best left ignored.
Two Small-Cap Stocks to Sell:
Yext (YEXT)
Market Cap: $1.01 billion
Founded in 2006 by Howard Lerman, Yext (NYSE: YEXT) offers software as a service that helps their clients manage and monitor their online listings and customer reviews across all relevant databases, from Google Maps to Alexa or Siri.
Why Does YEXT Fall Short?
- Underwhelming ARR growth of 8.8% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
- Projected sales growth of 4.4% for the next 12 months suggests sluggish demand
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
Yext is trading at $8.23 per share, or 2.4x forward price-to-sales. To fully understand why you should be careful with YEXT, check out our full research report (it’s free).
Kohl's (KSS)
Market Cap: $949 million
Founded as a corner grocery store in Milwaukee, Wisconsin, Kohl’s (NYSE: KSS) is a department store chain that sells clothing, cosmetics, electronics, and home goods.
Why Do We Avoid KSS?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Sales are projected to tank by 5.2% over the next 12 months as its demand continues evaporating
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $8.47 per share, Kohl's trades at 32.2x forward P/E. Read our free research report to see why you should think twice about including KSS in your portfolio.
One Small-Cap Stock to Watch:
MACOM (MTSI)
Market Cap: $9.72 billion
Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.
Why Are We Positive On MTSI?
- Market share has increased this cycle as its 9.9% annual revenue growth over the last two years was exceptional
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 21.6%
- Earnings per share grew by 81.7% annually over the last five years, massively outpacing its peers
MACOM’s stock price of $126.05 implies a valuation ratio of 34.8x forward P/E. Is now a good time to buy? See for yourself in our comprehensive 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 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 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
