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 100 bagger and two that may have trouble.
Two Small-Cap Stocks to Sell:
Moog (MOG.A)
Market Cap: $5.70 billion
Responsible for the flight control actuation system integrated in the B-2 stealth bomber, Moog (NYSE: MOG.A) provides precision motion control solutions used in aerospace and defense applications
Why Does MOG.A Give Us Pause?
- Sales trends were unexciting over the last five years as its 4.2% annual growth was below the typical industrials company
- Estimated sales growth of 1.7% for the next 12 months implies demand will slow from its two-year trend
- 12.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Moog’s stock price of $181.16 implies a valuation ratio of 20.6x forward P/E. Check out our free in-depth research report to learn more about why MOG.A doesn’t pass our bar.
PennyMac Mortgage Investment Trust (PMT)
Market Cap: $1.14 billion
Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE: PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.
Why Does PMT Fall Short?
- Sales tumbled by 10.4% annually over the last two years, showing market trends are working against its favor during this cycle
- Annual tangible book value per share declines of 1.6% for the past two years show its capital management struggled during this cycle
- Tangible book value per share is expected to decline once again over the next 12 months as it continues working through challenging credit conditions
At $13.13 per share, PennyMac Mortgage Investment Trust trades at 0.8x forward P/B. To fully understand why you should be careful with PMT, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
Pinnacle Financial Partners (PNFP)
Market Cap: $9.08 billion
Founded in 2000 with a focus on delivering big-bank capabilities with community bank personalization, Pinnacle Financial Partners (NASDAQ: PNFP) is a Tennessee-based financial holding company that provides banking, investment, trust, mortgage, and insurance services to businesses and individuals.
Why Do We Like PNFP?
- Annual net interest income growth of 13.5% over the past four years was outstanding, reflecting market share gains this cycle
- Productivity and efficiency ratio profits are expected to increase next year as some fixed cost leverage kicks in
- Additional sales over the last five years increased its profitability as the 12.7% annual growth in its earnings per share outpaced its revenue
Pinnacle Financial Partners is trading at $117.50 per share, or 1.4x forward P/B. Is now the right time to buy? Find out in our full 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 5 Growth Stocks for this month. 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
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