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.
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. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two best left ignored.
Two Small-Cap Stocks to Sell:
Silgan Holdings (SLGN)
Market Cap: $5.50 billion
Established in 1987, Silgan Holdings (NYSE:SLGN) is a supplier of rigid packaging for consumer goods products, specializing in metal containers, closures, and plastic packaging.
Why Are We Out on SLGN?
- Annual sales declines of 4.4% for the past two years show its products and services struggled to connect with the market during this cycle
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
Silgan Holdings’s stock price of $51.47 implies a valuation ratio of 12.6x forward price-to-earnings. To fully understand why you should be careful with SLGN, check out our full research report (it’s free).
Azenta (AZTA)
Market Cap: $1.99 billion
Founded as a small biotech firm, Azenta (NASDAQ:AZTA) provides services for life sciences research and biopharmaceutical applications such as sample management, cold chain logistics, and storage services.
Why Do We Steer Clear of AZTA?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 6.5% annually over the last five years
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
Azenta is trading at $43.55 per share, or 84.4x forward price-to-earnings. Check out our free in-depth research report to learn more about why AZTA doesn’t pass our bar.
One Small-Cap Stock to Watch:
Dycom (DY)
Market Cap: $3.96 billion
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.
Why Are We Fans of DY?
- Impressive 11.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Share buybacks catapulted its annual earnings per share growth to 29.2%, which outperformed its revenue gains over the last two years
At $137.26 per share, Dycom trades at 14.4x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
