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. That said, here is one small-cap stock that could be the next big thing and two best left ignored.
Two Small-Cap Stocks to Sell:
Concrete Pumping (BBCP)
Market Cap: $324.1 million
Going public via SPAC in 2018, Concrete Pumping (NASDAQ: BBCP) is a provider of concrete pumping and waste management services in the United States and the United Kingdom.
Why Should You Dump BBCP?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Projected sales decline of 3.1% over the next 12 months indicates demand will continue deteriorating
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
Concrete Pumping is trading at $6.23 per share, or 15x forward P/E. Dive into our free research report to see why there are better opportunities than BBCP.
Hayward (HAYW)
Market Cap: $2.99 billion
Credited with introducing the first variable-speed pool pump, Hayward (NYSE: HAYW) makes residential and commercial pool equipment and accessories.
Why Do We Steer Clear of HAYW?
- 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
- Earnings per share have dipped by 16.8% annually over the past three years, which is concerning because stock prices follow EPS over the long term
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $13.81 per share, Hayward trades at 18.2x forward P/E. To fully understand why you should be careful with HAYW, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
Brinker International (EAT)
Market Cap: $8.00 billion
Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Why Are We Fans of EAT?
- Same-store sales growth over the past two years shows it’s successfully drawing diners into its restaurants
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
- Free cash flow margin expanded by 4.2 percentage points over the last year, providing additional flexibility for investments and share buybacks/dividends
Brinker International’s stock price of $177 implies a valuation ratio of 19.4x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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-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
