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. That said, here is one small-cap stock that could be the next 100 bagger and two that could be down big.

Two Small-Cap Stocks to Sell:

Littelfuse (LFUS)

Market Cap: $5.64 billion

The developer of the first blade-type automotive fuse, Littelfuse (NASDAQ: LFUS) provides electrical protection and control components for the automotive, industrial, electronics, and telecommunications industries.

Why Do We Think LFUS Will Underperform?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 6% annually over the last two years
2. Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 24.2% annually, worse than its revenue
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Littelfuse is trading at $228.31 per share, or 23.4x forward P/E. Read our free research report to see why you should think twice about including LFUS in your portfolio.

UFP Technologies (UFPT)

Market Cap: $1.82 billion

With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ: UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.

Why Is UFPT Not Exciting?

1. Smaller revenue base of $547.6 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy

UFP Technologies’s stock price of $244.17 implies a valuation ratio of 25.9x forward P/E. Check out our free in-depth research report to learn more about why UFPT doesn’t pass our bar.

One Small-Cap Stock to Watch:

CECO Environmental (CECO)

Market Cap: $1.19 billion

With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ: CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.

Why Could CECO Be a Winner?

1. Impressive 17.2% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Market share is on track to rise over the next 12 months as its 22.6% projected revenue growth implies demand will accelerate from its two-year trend
3. Adjusted operating margin improvement of 10.8 percentage points over the last five years demonstrates its ability to scale efficiently

At $33.88 per share, CECO Environmental trades at 26.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

Donald Trump’s April 2024 "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-micro-cap company Kadant (+351% 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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