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 100 bagger and two that could be down big.
Two Small-Cap Stocks to Sell:
Astec (ASTE)
Market Cap: $1.05 billion
Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ:ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.
Why Do We Think Twice About ASTE?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 28.2% declines over the past two years
- Gross margin of 23.8% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Astec’s stock price of $46.03 implies a valuation ratio of 17.8x forward P/E. Check out our free in-depth research report to learn more about why ASTE doesn’t pass our bar.
10x Genomics (TXG)
Market Cap: $1.75 billion
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ:TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
Why Is TXG Not Exciting?
- 6.5% annual revenue growth over the last two years was slower than its healthcare peers
- Negative free cash flow raises questions about the return timeline for its investments
- Negative returns on capital show management lost money while trying to expand the business
At $14.03 per share, 10x Genomics trades at 3x forward price-to-sales. If you’re considering TXG for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Buy:
Vital Farms (VITL)
Market Cap: $2.31 billion
With an emphasis on ethically produced products, Vital Farms (NASDAQ:VITL) specializes in pasture-raised eggs and butter.
Why Do We Love VITL?
- Products are flying off the shelves as its unit sales averaged 20.1% growth over the past two years
- Exciting sales outlook for the upcoming 12 months calls for 31.3% growth, an acceleration from its three-year trend
- Earnings per share have massively outperformed its peers over the last three years, increasing by 109% annually
Vital Farms is trading at $51.05 per share, or 36.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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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