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1 Small-Cap Stock for Long-Term Investors and 2 We Question

COCO Cover Image

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. Keeping that in mind, here is one small-cap stock that could amplify your portfolio’s returns and two that may have trouble.

Two Small-Cap Stocks to Sell:

Sunrun (RUN)

Market Cap: $3.70 billion

Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ: RUN) provides residential solar electricity, specializing in panel installation and leasing services.

Why Do We Think Twice About RUN?

  1. Sales tumbled by 6.2% annually over the last two years, showing market trends are working against its favor during this cycle
  2. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
  3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

At $16.11 per share, Sunrun trades at 22.3x forward EV-to-EBITDA. To fully understand why you should be careful with RUN, check out our full research report (it’s free).

Renasant (RNST)

Market Cap: $3.52 billion

Founded in 1904 during a time when the South was rebuilding its economy, Renasant (NYSE: RNST) is a regional bank holding company that offers banking, wealth management, insurance, and specialized lending services throughout the Southeast.

Why Are We Wary of RNST?

  1. Inferior net interest margin of 3.4% means it must compensate for lower profitability through increased loan originations
  2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 8.6% annually while its revenue grew
  3. Capital trends were unexciting over the last two years as its 4.2% annual tangible book value per share growth was below the typical banking firm

Renasant is trading at $37.05 per share, or 0.9x forward P/B. Check out our free in-depth research report to learn more about why RNST doesn’t pass our bar.

One Small-Cap Stock to Watch:

Vita Coco (COCO)

Market Cap: $2.29 billion

Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ: COCO) offers coconut water products that are a natural way to quench thirst.

Why Is COCO on Our Radar?

  1. Products are seeing elevated demand as its unit sales averaged 7.8% growth over the past two years
  2. Earnings per share have massively outperformed its peers over the last three years, increasing by 195% annually
  3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are growing as it capitalizes on even better market opportunities

Vita Coco’s stock price of $38.23 implies a valuation ratio of 31.1x forward P/E. 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 9 Market-Beating Stocks. 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. 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.

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