Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
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 100 bagger and two that could be down big.
Two Small-Cap Stocks to Sell:
Astec (ASTE)
Market Cap: $1.05 billion
Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.
Why Do We Think Twice About ASTE?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 28.2% declines over the past two years
- Gross margin of 23.8% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Astec’s stock price of $46.03 implies a valuation ratio of 17.8x forward P/E. Check out our free in-depth research report to learn more about why ASTE doesn’t pass our bar.
10x Genomics (TXG)
Market Cap: $1.75 billion
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
Why Is TXG Not Exciting?
- 6.5% annual revenue growth over the last two years was slower than its healthcare peers
- Negative free cash flow raises questions about the return timeline for its investments
- Negative returns on capital show management lost money while trying to expand the business
At $14.03 per share, 10x Genomics trades at 3x forward price-to-sales. If you’re considering TXG for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Buy:
Vital Farms (VITL)
Market Cap: $2.31 billion
With an emphasis on ethically produced products, Vital Farms (NASDAQ: VITL) specializes in pasture-raised eggs and butter.
Why Do We Love VITL?
- Products are flying off the shelves as its unit sales averaged 20.1% growth over the past two years
- Exciting sales outlook for the upcoming 12 months calls for 31.3% growth, an acceleration from its three-year trend
- Earnings per share have massively outperformed its peers over the last three years, increasing by 109% annually
Vital Farms is trading at $51.05 per share, or 36.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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-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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
