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:
Columbus McKinnon (CMCO)
Market Cap: $462.6 million
With 19 different brands across the globe, Columbus McKinnon (NASDAQ: CMCO) offers material handling equipment for the construction, manufacturing, and transportation industries.
Why Is CMCO Risky?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 7.6 percentage points
- Earnings per share fell by 10.5% annually over the last two years while its revenue was flat, showing each sale was less profitable
At $16.28 per share, Columbus McKinnon trades at 9.4x forward P/E. If you’re considering CMCO for your portfolio, see our FREE research report to learn more.
United Bankshares (UBSI)
Market Cap: $5.96 billion
With roots dating back to 1982 and a strong presence in the Mid-Atlantic region, United Bankshares (NASDAQ: UBSI) is a bank holding company that provides commercial and retail banking services through its United Bank subsidiary across multiple states.
Why Is UBSI Not Exciting?
- Muted 8.8% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 2.5% annually
- Estimated tangible book value per share growth of 6.3% for the next 12 months implies profitability will slow from its two-year trend
United Bankshares’s stock price of $43.33 implies a valuation ratio of 1.1x forward P/B. To fully understand why you should be careful with UBSI, check out our full research report (it’s free).
One Small-Cap Stock to Buy:
Oscar Health (OSCR)
Market Cap: $6.62 billion
Founded in 2012 to simplify the notoriously complex American healthcare system, Oscar Health (NYSE: OSCR) is a technology-focused health insurance company that offers individual and small group health plans through its cloud-native platform.
Why Will OSCR Outperform?
- Annual revenue growth of 42.6% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 31.5% annually over the last four years, massively outpacing its peers
- Free cash flow margin jumped by 19.9 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Oscar Health is trading at $21.95 per share, or 18.8x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
