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. Keeping that in mind, here are two small-cap stocks that could be the next 100 baggers and one best left ignored.

One Small-Cap Stock to Sell:

Envista (NVST)

Market Cap: $4.58 billion

Uniting more than 30 trusted brands including Nobel Biocare, Ormco, and DEXIS under one corporate umbrella, Envista Holdings (NYSE: NVST) is a global dental products company that provides equipment, consumables, and specialized technologies for dental professionals.

Why Should You Dump NVST?

1. 2.9% annual revenue growth over the last two years was slower than its healthcare peers
2. Negative returns on capital show management lost money while trying to expand the business, and its shrinking returns suggest its past profit sources are losing steam
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $27.92 per share, Envista trades at 20.1x forward P/E. If you’re considering NVST for your portfolio, see our FREE research report to learn more.

Two Small-Cap Stocks to Watch:

Wingstop (WING)

Market Cap: $6.50 billion

The passion project of two chicken wing aficionados in Texas, Wingstop (NASDAQ: WING) is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.

Why Is WING a Top Pick?

1. Same-store sales growth over the past two years shows it’s successfully drawing diners into its restaurants
2. Healthy operating margin of 26.1% shows it’s a well-run company with efficient processes
3. WING is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

Wingstop is trading at $237.62 per share, or 51x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

NMI Holdings (NMIH)

Market Cap: $2.94 billion

Founded in the aftermath of the 2008 housing crisis to bring new capacity to the mortgage insurance market, NMI Holdings (NASDAQ: NMIH) provides mortgage insurance that protects lenders against losses when homebuyers default on their mortgage loans.

Why Are We Positive On NMIH?

1. Pre-tax profit margin improvement of 20.4 percentage points over the last five years demonstrates its ability to scale efficiently
2. Annual book value per share growth of 16.1% over the past five years was outstanding, reflecting strong capital accumulation this cycle
3. Market-beating return on equity illustrates that management has a knack for investing in profitable ventures

NMI Holdings’s stock price of $38.72 implies a valuation ratio of 1x forward P/B. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.