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.
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 may have trouble.
Two Small-Cap Stocks to Sell:
Tandem Diabetes (TNDM)
Market Cap: $823 million
With technology that automatically adjusts insulin delivery based on continuous glucose monitoring data, Tandem Diabetes Care (NASDAQ: TNDM) develops and manufactures automated insulin delivery systems that help people with diabetes manage their blood glucose levels.
Why Is TNDM Risky?
- Underwhelming pump shipments over the past two years indicate demand is soft and that the company may need to revise its strategy
- Earnings per share fell by 21% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $12.31 per share, Tandem Diabetes trades at 15.2x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including TNDM in your portfolio.
Eastern Bank (EBC)
Market Cap: $3.48 billion
Founded in 1818 as one of America's oldest mutual banks before converting to a public company in 2020, Eastern Bankshares (NASDAQ: EBC) operates as a bank holding company providing commercial and retail banking services primarily in Massachusetts, New Hampshire, and Rhode Island.
Why Are We Wary of EBC?
- Annual revenue growth of 1.5% over the last five years was below our standards for the banking sector
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 6.8% annually over the last four years
- Forecasted tangible book value per share decline of 5.5% for the upcoming 12 months implies profitability will deteriorate significantly
Eastern Bank is trading at $17.80 per share, or 1x forward P/B. Dive into our free research report to see why there are better opportunities than EBC.
One Small-Cap Stock to Watch:
Tecnoglass (TGLS)
Market Cap: $3.27 billion
The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE: TGLS) is a manufacturer of architectural glass, windows, and aluminum products.
Why Could TGLS Be a Winner?
- Annual revenue growth of 20.3% over the past five years was outstanding, reflecting market share gains this cycle
- Disciplined cost controls and effective management resulted in a strong long-term operating margin of 27.3%, and it turbocharged its profits by achieving some fixed cost leverage
- ROIC punches in at 28.9%, illustrating management’s expertise in identifying profitable investments, and its returns are growing as it capitalizes on even better market opportunities
Tecnoglass’s stock price of $69.54 implies a valuation ratio of 15.5x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 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
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