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 are two small-cap stocks that could be the next big thing and one that may have trouble.
One Small-Cap Stock to Sell:
Albany (AIN)
Market Cap: $1.71 billion
Founded in 1895, Albany (NYSE: AIN) is a global textiles and materials processing company, specializing in machine clothing for paper mills and engineered composite structures for aerospace and other industries.
Why Are We Out on AIN?
- Annual sales declines of 1.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share fell by 5.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Albany is trading at $60.28 per share, or 1.4x trailing 12-month price-to-sales. To fully understand why you should be careful with AIN, check out our full research report (it’s free).
Two Small-Cap Stocks to Watch:
Matrix Service (MTRX)
Market Cap: $300.2 million
Founded in Oklahoma, Matrix Service (NASDAQ: MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.
Why Do We Like MTRX?
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 49.8% over the last two years outstripped its revenue performance
- Free cash flow margin jumped by 8.3 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $10.61 per share, Matrix Service trades at 17.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Nicolet Bankshares (NIC)
Market Cap: $3.57 billion
Starting as Green Bay Financial Corporation in 2000 before rebranding in 2002, Nicolet Bankshares (NYSE: NIC) is a regional bank holding company that provides commercial, agricultural, and consumer banking services primarily in Wisconsin, Michigan, and Minnesota.
Why Will NIC Outperform?
- Annual net interest income growth of 24.8% over the last five years was superb and indicates its market share increased during this cycle
- Net interest margin jumped by 69 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more resources to pursue growth initiatives
- Additional sales over the last two years increased its profitability as the 26.2% annual growth in its earnings per share outpaced its revenue
Nicolet Bankshares’s stock price of $170.34 implies a valuation ratio of 1.5x forward P/B. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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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.
