Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
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 is one small-cap stock that could be the next 100 bagger and two best left ignored.
Two Small-Cap Stocks to Sell:
Medifast (MED)
Market Cap: $99.33 million
Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE: MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.
Why Is MED Risky?
- Products aren't resonating with the market as its revenue declined by 37.7% annually over the last three years
- Revenue base of $385.8 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Earnings per share have dipped by 28.8% annually over the past three years, which is concerning because stock prices follow EPS over the long term
Medifast is trading at $9.63 per share, or 11.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than MED.
Rogers (ROG)
Market Cap: $1.95 billion
With roots dating back to 1832, making it one of America's oldest continuously operating companies, Rogers (NYSE: ROG) designs and manufactures specialized engineered materials and components used in electric vehicles, telecommunications, renewable energy, and other high-performance applications.
Why Should You Dump ROG?
- Annual sales declines of 5.5% for the past two years show its products and services struggled to connect with the market during this cycle
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 7.2 percentage points
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
At $109.16 per share, Rogers trades at 33.9x forward P/E. Check out our free in-depth research report to learn more about why ROG doesn’t pass our bar.
One Small-Cap Stock to Buy:
Limbach (LMB)
Market Cap: $938.2 million
Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.
Why Are We Backing LMB?
- Annual revenue growth of 11.9% over the past two years was outstanding, reflecting market share gains this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 46.5% outpaced its revenue gains
- Free cash flow margin jumped by 11.6 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Limbach’s stock price of $80.37 implies a valuation ratio of 18.4x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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.
