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. Keeping that in mind, 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:
Simply Good Foods (SMPL)
Market Cap: $1.86 billion
Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ:SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Why Do We Think SMPL Will Underperform?
- Smaller revenue base of $1.45 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- 4.9 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
At $19.73 per share, Simply Good Foods trades at 10.5x forward P/E. Read our free research report to see why you should think twice about including SMPL in your portfolio.
Banc of California (BANC)
Market Cap: $3.02 billion
Originally established in 1941 and now operating with a tech-forward approach that includes its SmartStreet platform for homeowner associations, Banc of California (NYSE:BANC) is a California-based bank holding company that provides banking services to small and middle-market businesses, entrepreneurs, and individuals.
Why Should You Dump BANC?
- Flat net interest income over the last five years suggest it must find different ways to grow during this cycle
- Costs have risen faster than its revenue over the last five years, causing its efficiency ratio to worsen by 21.8 percentage points
- Tangible book value per share tumbled by 3.6% annually over the last five years, showing banking sector trends are working against its favor during this cycle
Banc of California is trading at $19.46 per share, or 1x forward P/B. If you’re considering BANC for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Watch:
Lazard (LAZ)
Market Cap: $4.72 billion
Tracing its roots back to 1848 when it began as a dry goods merchant in New Orleans, Lazard (NYSE:LAZ) is a global financial advisory and asset management firm that provides strategic advice to corporations, governments, institutions, and wealthy individuals.
Why Do We Like LAZ?
- Industry-leading 29% return on equity demonstrates management’s skill in finding high-return investments
Lazard’s stock price of $49.73 implies a valuation ratio of 14.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.