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. Keeping that in mind, here is one small-cap stock that could be the next big thing and two best left ignored.
Two Small-Cap Stocks to Sell:
Saia (SAIA)
Market Cap: $7.12 billion
Pivoting its business model after realizing there was more success in delivering produce than selling it, Saia (NASDAQ: SAIA) is a provider of freight transportation solutions.
Why Are We Hesitant About SAIA?
- Underwhelming tons shipped over the past two years suggest it might have to lower prices to accelerate growth
- Earnings per share have dipped by 4.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- 15.7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $268.25 per share, Saia trades at 17.2x forward P/E. If you’re considering SAIA for your portfolio, see our FREE research report to learn more.
Park-Ohio (PKOH)
Market Cap: $245.7 million
Based in Cleveland, Park-Ohio (NASDAQ: PKOH) provides supply chain management services, capital equipment, and manufactured components.
Why Is PKOH Risky?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Gross margin of 15.1% reflects its high production costs
- Free cash flow margin shrank by 5.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Park-Ohio is trading at $18.12 per share, or 5.6x forward P/E. Dive into our free research report to see why there are better opportunities than PKOH.
One Small-Cap Stock to Buy:
QuinStreet (QNST)
Market Cap: $874.2 million
Founded during the dot-com era in 1999 and specializing in high-intent consumer traffic, QuinStreet (NASDAQ: QNST) operates digital performance marketplaces that connect clients in financial and home services with consumers actively searching for their products.
Why Are We Backing QNST?
- Annual revenue growth of 31.4% over the last two years was superb and indicates its market share increased during this cycle
- Projected revenue growth of 10.1% for the next 12 months suggests its momentum from the last two years will persist
- Earnings per share grew by 103% annually over the last two years, massively outpacing its peers
QuinStreet’s stock price of $15.50 implies a valuation ratio of 14x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 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.
