Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
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. That said, 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:
Wolverine Worldwide (WWW)
Market Cap: $1.35 billion
Founded in 1883, Wolverine Worldwide (NYSE: WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.
Why Should You Sell WWW?
- Sales were flat over the last five years, indicating it’s failed to expand its business
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 7.8% annually
- Free cash flow margin is not anticipated to grow over the next year
Wolverine Worldwide is trading at $16.88 per share, or 11.3x forward P/E. Read our free research report to see why you should think twice about including WWW in your portfolio.
ArcBest (ARCB)
Market Cap: $1.92 billion
Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ: ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.
Why Are We Out on ARCB?
- Weak unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Sales were less profitable over the last two years as its earnings per share fell by 31.7% annually, worse than its revenue declines
- Eroding returns on capital suggest its historical profit centers are aging
At $85.96 per share, ArcBest trades at 18.7x forward P/E. To fully understand why you should be careful with ARCB, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
BellRing Brands (BRBR)
Market Cap: $2.17 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 Could BRBR Be a Winner?
- Stellar 17.8% growth in unit sales over the past two years demonstrates the high demand for its products
- Free cash flow margin increased by 4.7 percentage points over the last year, giving the company more capital to invest or return to shareholders
- ROIC punches in at 45.3%, illustrating management’s expertise in identifying profitable investments, and its returns are growing as it capitalizes on even better market opportunities
BellRing Brands’s stock price of $18.38 implies a valuation ratio of 9.4x forward P/E. Is now the right time to buy? Find out 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
