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. That said, 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:

Appian (APPN)

Market Cap: $2.15 billion

Founded by Matt Calkins and his three friends out of an apartment in Northern Virginia, Appian (NASDAQ: APPN) sells a software platform that lets its users build applications without using much code, allowing them to create new software more quickly.

Why Are We Wary of APPN?

1. 16% annual revenue growth over the last three years was slower than its software peers
2. Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
3. Projected 2.8 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position

Appian is trading at $29.09 per share, or 2.9x forward price-to-sales. Check out our free in-depth research report to learn more about why APPN doesn’t pass our bar.

BeautyHealth (SKIN)

Market Cap: $239.7 million

Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ: SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.

Why Do We Avoid SKIN?

1. Annual revenue declines of 1.6% over the last three years indicate problems with its market positioning
2. Revenue base of $310.1 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Historical operating margin losses point to an inefficient cost structure

BeautyHealth’s stock price of $2.04 implies a valuation ratio of 12.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SKIN.

One Small-Cap Stock to Watch:

First Commonwealth Financial (FCF)

Market Cap: $1.70 billion

Tracing its roots back to the Great Depression era of 1934, First Commonwealth Financial (NYSE: FCF) is a financial holding company that provides consumer and commercial banking, wealth management, and insurance services across Pennsylvania and Ohio.

Why Do We Like FCF?

1. Net interest income outlook for the upcoming 12 months calls for 11.2% growth, an acceleration from its five-year trend
2. Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 9.6% outpaced its revenue gains
3. Industry-leading 11.4% return on equity demonstrates management’s skill in finding high-return investments

At $16.21 per share, First Commonwealth Financial trades at 1.1x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at 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

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.