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.
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 may have trouble.
Two Small-Cap Stocks to Sell:
Wyndham (WH)
Market Cap: $6.35 billion
Established in 1981, Wyndham (NYSE: WH) is a global hotel franchising company with over 9,000 hotels across nearly 95 countries on six continents.
Why Are We Hesitant About WH?
- Softer revenue per room over the past two years suggests it might have to invest in new amenities such as restaurants and bars to attract customers
- Estimated sales growth of 3.8% for the next 12 months is soft and implies weaker demand
- Low returns on capital reflect management’s struggle to allocate funds effectively
Wyndham is trading at $83.14 per share, or 16.8x forward P/E. If you’re considering WH for your portfolio, see our FREE research report to learn more.
Employers Holdings (EIG)
Market Cap: $993.1 million
With roots in Nevada and a strong concentration in California where 45% of its premiums are generated, Employers Holdings (NYSE: EIG) is a specialty provider of workers' compensation insurance focused on small and select businesses engaged in low-to-medium hazard industries across the United States.
Why Should You Sell EIG?
- Growth in insurance policies was lackluster over the last two years as its 3.4% annual growth underperformed the typical financial institution
- Forecasted revenue decline of 1.8% for the upcoming 12 months implies demand will fall off a cliff
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 3.8% annually
Employers Holdings’s stock price of $42.24 implies a valuation ratio of 0.9x forward P/B. Read our free research report to see why you should think twice about including EIG in your portfolio.
One Small-Cap Stock to Buy:
Zeta Global (ZETA)
Market Cap: $5.12 billion
Powered by an AI engine that processes over one trillion consumer signals monthly, Zeta Global (NYSE: ZETA) operates a data-driven cloud platform that helps companies target, connect, and engage with consumers through personalized marketing across channels like email, social media, and video.
Why Will ZETA Beat the Market?
- Billings have averaged 40.6% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Forecasted revenue growth of 17.9% for the next 12 months indicates its momentum over the last two years is sustainable
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
At $21.58 per share, Zeta Global trades at 3.4x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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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