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. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two that could be down big.

Two Small-Cap Stocks to Sell:

Flowers Foods (FLO)

Market Cap: $3.35 billion

With Wonder Bread as its premier brand, Flower Foods (NYSE: FLO) is a packaged foods company that focuses on bakery products such as breads, buns, and cakes.

Why Does FLO Fall Short?

1. Declining unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
2. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
3. Flat earnings per share over the last three years underperformed the sector average

At $15.98 per share, Flowers Foods trades at 13.7x forward P/E. Read our free research report to see why you should think twice about including FLO in your portfolio.

Churchill Downs (CHDN)

Market Cap: $7.15 billion

Famous for hosting the Kentucky Derby, Churchill Downs (NASDAQ: CHDN) operates a horse racing, online wagering, and gaming entertainment business in the United States.

Why Does CHDN Worry Us?

1. Estimated sales growth of 5.5% for the next 12 months implies demand will slow from its two-year trend
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 4.5% for the last two years
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Churchill Downs’s stock price of $98.92 implies a valuation ratio of 15.2x forward P/E. Check out our free in-depth research report to learn more about why CHDN doesn’t pass our bar.

One Small-Cap Stock to Buy:

Nicolet Bankshares (NIC)

Market Cap: $1.77 billion

Starting as Green Bay Financial Corporation in 2000 before rebranding in 2002, Nicolet Bankshares (NYSE: NIC) is a regional bank holding company that provides commercial, agricultural, and consumer banking services primarily in Wisconsin, Michigan, and Minnesota.

Why Is NIC a Good Business?

1. Impressive 16.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Annual net interest income growth of 20.4% over the past four years was outstanding, reflecting market share gains this cycle
3. Earnings growth has trumped its peers over the last two years as its EPS has compounded at 10.6% annually

Nicolet Bankshares is trading at $117.07 per share, or 1.4x forward P/B. Is now a good time to buy? See for yourself in our in-depth 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 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