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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here is one small-cap stock that could be the next big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
UFP Industries (UFPI)
Market Cap: $5.85 billion
Beginning as a lumber supplier in the 1950s, UFP Industries (NASDAQ: UFPI) is a holding company making building materials for the construction, retail, and industrial sectors.
Why Does UFPI Worry Us?
- Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
UFP Industries is trading at $100.17 per share, or 15.5x forward P/E. Check out our free in-depth research report to learn more about why UFPI doesn’t pass our bar.
Benchmark (BHE)
Market Cap: $1.44 billion
Operating as a critical behind-the-scenes partner for complex technology products since 1979, Benchmark Electronics (NYSE: BHE) provides advanced manufacturing, engineering, and technology solutions for original equipment manufacturers across aerospace, medical, industrial, and technology sectors.
Why Are We Hesitant About BHE?
- Sales tumbled by 6.3% annually over the last two years, showing market trends are working against its favor during this cycle
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- ROIC of 7.3% reflects management’s challenges in identifying attractive investment opportunities
Benchmark’s stock price of $40.16 implies a valuation ratio of 16.2x forward P/E. If you’re considering BHE for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Buy:
BellRing Brands (BRBR)
Market Cap: $5.24 billion
Spun out of Post Holdings in 2019, Bellring Brands (NYSE: BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.
Why Is BRBR a Top Pick?
- Products are flying off the shelves as its unit sales averaged 20.1% growth over the past two years
- Share buybacks catapulted its annual earnings per share growth to 27.8%, which outperformed its revenue gains over the last three years
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $41.62 per share, BellRing Brands trades at 17.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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-small-cap company Comfort Systems (+782% 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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