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.
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 that may have trouble.
Two Small-Cap Stocks to Sell:
Nature's Sunshine (NATR)
Market Cap: $358.7 million
Started on a kitchen table in Utah, Nature’s Sunshine (NASDAQ: NATR) manufactures and sells nutritional and personal care products.
Why Does NATR Worry Us?
- Sales trends were unexciting over the last three years as its 5.3% annual growth was below the typical consumer staples company
- Subscale operations are evident in its revenue base of $489.8 million, meaning it has fewer distribution channels than its larger rivals
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
Nature's Sunshine’s stock price of $21.50 implies a valuation ratio of 18x forward P/E. To fully understand why you should be careful with NATR, check out our full research report (it’s free).
Covenant Logistics (CVLG)
Market Cap: $1.17 billion
Started with 25 trucks and 50 trailers, Covenant Logistics (NASDAQ: CVLG) is a provider of expedited long haul freight services, offering a range of logistics solutions.
Why Should You Sell CVLG?
- Sales trends were unexciting over the last two years as its 3.8% annual growth was below the typical industrials company
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 15.7% annually
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $43.90 per share, Covenant Logistics trades at 0.9x forward price-to-sales. Check out our free in-depth research report to learn more about why CVLG doesn’t pass our bar.
One Small-Cap Stock to Buy:
Happen Bank (HAPN)
Market Cap: $2.10 billion
Pioneering peer-to-peer lending in the US before evolving into a digital bank, Happen Bank (NYSE: HAPN) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.
Why Will HAPN Beat the Market?
- Impressive 28.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 109% annually, topping its revenue gains
- ROE of 11.5% shows management can invest its resources competently
Happen Bank is trading at $19.69 per share, or 11.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
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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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
