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.

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 100 bagger and two best left ignored.

Two Small-Cap Stocks to Sell:

Sphere Entertainment (SPHR)

Market Cap: $1.13 billion

Famous for its viral Las Vegas Sphere venue, Sphere Entertainment (NYSE: SPHR) hosts live entertainment events and distributes content across various media platforms.

Why Should You Dump SPHR?

1. 1.7% annual revenue growth over the last five years was slower than its consumer discretionary peers
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Sphere Entertainment is trading at $31.03 per share, or 24.3x forward EV-to-EBITDA. To fully understand why you should be careful with SPHR, check out our full research report (it’s free).

Cogent (CCOI)

Market Cap: $3.35 billion

With a massive network spanning 54 countries across six continents and connecting over 3,200 buildings, Cogent Communications (NASDAQ: CCOI) is a facilities-based provider of high-speed Internet access, private network services, and data center colocation space to businesses and bandwidth-intensive organizations.

Why Does CCOI Fall Short?

1. Free cash flow margin dropped by 34.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
2. Waning returns on capital imply its previous profit engines are losing steam
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Cogent’s stock price of $69.74 implies a valuation ratio of 11.5x forward EV-to-EBITDA. If you’re considering CCOI for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Watch:

Kirby (KEX)

Market Cap: $5.51 billion

Transporting goods along all U.S. coasts, Kirby (NYSE: KEX) provides inland and coastal marine transportation services.

Why Are We Positive On KEX?

1. Operating margin improvement of 31.6 percentage points over the last five years demonstrates its ability to scale efficiently
2. Share repurchases over the last two years enabled its annual earnings per share growth of 61.3% to outpace its revenue gains
3. Improving returns on capital suggest its past investments are beginning to deliver value

At $96.35 per share, Kirby trades at 14.3x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we’re here to help you pick them.

Get started by checking 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.