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.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. That said, here are two small-cap stocks that could be the next 100 baggers and one that may have trouble.
One Small-Cap Stock to Sell:
Sinclair (SBGI)
Market Cap: $1.20 billion
With over 2,400 hours of local news produced weekly and 640 broadcast channels reaching millions of American homes, Sinclair (NASDAQ:SBGI) operates a network of 185 local television stations across 86 U.S. markets, producing news programming and distributing content from major networks.
Why Do We Pass on SBGI?
- Annual sales declines of 11.8% for the past five years show its products and services struggled to connect with the market during this cycle
- Waning returns on capital imply its previous profit engines are losing steam
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $16.71 per share, Sinclair trades at 25.7x forward P/E. Check out our free in-depth research report to learn more about why SBGI doesn’t pass our bar.
Two Small-Cap Stocks to Watch:
Douglas Dynamics (PLOW)
Market Cap: $1.07 billion
Once manufacturing snowplows designed for the iconic jeep vehicle precursor, Douglas Dynamics (NYSE:PLOW) offers snow and ice equipment for the roads and sidewalks.
Why Do We Like PLOW?
- Estimated revenue growth of 11.4% for the next 12 months implies demand will accelerate from its two-year trend
- Financial risk is minimized through its long-term operating margin of 9.4%, and its operating leverage amplified its profits over the last five years
- Earnings per share have massively outperformed its peers over the last two years, increasing by 50% annually
Douglas Dynamics’s stock price of $46.23 implies a valuation ratio of 18x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Sezzle (SEZL)
Market Cap: $2.73 billion
Founded in 2016 as an alternative to traditional credit cards for younger shoppers, Sezzle (NASDAQ:SEZL) provides a payment platform that allows consumers to split purchases into four interest-free installments over six weeks at participating retailers.
Why Is SEZL a Good Business?
- Market share has increased this cycle as its 68.1% annual revenue growth over the last two years was exceptional
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 323% annually, topping its revenue gains
Sezzle is trading at $81.00 per share, or 15.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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.