Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.

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 that could be down big.

Two Small-Cap Stocks to Sell:

Magnachip (MX)

Market Cap: $133.4 million

With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE: MX) is a provider of analog and mixed-signal semiconductors.

Why Do We Avoid MX?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 18.5% annually over the last five years
2. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
3. Long-term business health is up for debate as its cash burn has increased over the last five years

Magnachip is trading at $3.70 per share, or 0.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than MX.

Gibraltar (ROCK)

Market Cap: $1.77 billion

Gibraltar (NASDAQ: ROCK) makes renewable energy, agriculture technology and infrastructure products. Its mission statement is to make everyday living more sustainable.

Why Does ROCK Worry Us?

1. Annual sales declines of 2.2% for the past two years show its products and services struggled to connect with the market during this cycle
2. Gross margin of 25.2% is below its competitors, leaving less money to invest in areas like marketing and R&D
3. Free cash flow margin dropped by 2 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Gibraltar’s stock price of $61 implies a valuation ratio of 12.4x forward P/E. Read our free research report to see why you should think twice about including ROCK in your portfolio.

One Small-Cap Stock to Watch:

FTAI Infrastructure (FIP)

Market Cap: $739.1 million

Spun off from FTAI Aviation in 2021, FTAI Infrastructure (NASDAQ: FIP) invests in and operates infrastructure and related assets across the transportation and energy sectors.

Why Are We Positive On FIP?

1. Market share has increased this cycle as its 33.3% annual revenue growth over the last three years was exceptional
2. Exciting sales outlook for the upcoming 12 months calls for 78.2% growth, an acceleration from its two-year trend

At $6.43 per share, FTAI Infrastructure trades at 2.8x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full 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 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.