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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. 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:
L.B. Foster (FSTR)
Market Cap: $392.4 million
Founded with a $2,500 loan, L.B. Foster (NASDAQ:FSTR) is a provider of products and services for the transportation and energy infrastructure sectors, including rail products, construction materials, and coating solutions.
Why Does FSTR Give Us Pause?
- Backlog failed to grow over the past two years, suggesting the company may need to tweak its product roadmap and go-to-market strategy
- Earnings per share lagged its peers over the last five years as they only grew by 1.2% annually
- Underwhelming 3.9% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $37.54 per share, L.B. Foster trades at 20.7x forward P/E. If you’re considering FSTR for your portfolio, see our FREE research report to learn more.
Republic Bancorp (RBCAA)
Market Cap: $1.84 billion
With roots dating back to 1974 and operating across multiple states including Kentucky, Indiana, Florida, Ohio, and Tennessee, Republic Bancorp (NASDAQGS:RBCA.A) is a Kentucky-based financial holding company that operates a bank offering traditional banking, mortgage services, and specialized financial products.
Why Do We Think Twice About RBCAA?
- 5.9% annual net interest income growth over the last five years was slower than its banking peers
- Projected net interest income growth of 4.9% for the next 12 months suggests sluggish demand
- Estimated tangible book value per share growth of 7.8% for the next 12 months implies profitability will slow from its two-year trend
Republic Bancorp’s stock price of $93.87 implies a valuation ratio of 1.5x forward P/B. Read our free research report to see why you should think twice about including RBCAA in your portfolio.
One Small-Cap Stock to Buy:
BGC (BGC)
Market Cap: $5.70 billion
Tracing its roots back to 1945 and named after founder Bernard Gerald Cantor, BGC Group (NASDAQ:BGC) operates a global brokerage and financial technology platform that facilitates trading across fixed income, foreign exchange, equities, energy, and commodities markets.
Why Do We Love BGC?
- Market share has increased this cycle as its 24.3% annual revenue growth over the last two years was exceptional
- Earnings per share grew by 24.3% annually over the last two years and trumped its peers
- Adequate return on equity shows management makes decent investment decisions
BGC is trading at $11.94 per share, or 8.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.