Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.
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 big thing and two best left ignored.
Two Small-Cap Stocks to Sell:
Array (ARRY)
Market Cap: $1.37 billion
Going public in October 2020, Array (NASDAQ:ARRY) is a global manufacturer of ground-mounting tracking systems for utility and distributed generation solar energy projects.
Why Should You Dump ARRY?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 9.8% annually over the last two years
- Earnings per share have dipped by 9.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $9.01 per share, Array trades at 11.9x forward P/E. If you’re considering ARRY for your portfolio, see our FREE research report to learn more.
Main Street Capital (MAIN)
Market Cap: $5.48 billion
With a focus on building long-term partnerships rather than quick transactions, Main Street Capital (NYSE:MAIN) is a business development company that provides long-term debt and equity capital to lower middle market and middle market companies.
Why Are We Hesitant About MAIN?
- Performance over the past two years shows its incremental sales were less profitable as its earnings per share were flat
- Capital trends were unexciting over the last two years as its 7.5% annual tangible book value per share growth was below the typical financials firm
Main Street Capital is trading at $61.35 per share, or 15.8x forward P/E. Read our free research report to see why you should think twice about including MAIN in your portfolio.
One Small-Cap Stock to Watch:
LSI (LYTS)
Market Cap: $579.2 million
Enhancing commercial environments, LSI (NASDAQ:LYTS) provides lighting and display solutions for businesses and retailers.
Why Are We Fans of LYTS?
- Impressive 15.6% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Operating margin expanded by 2.8 percentage points over the last five years as it scaled and became more efficient
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 50.7% annually
LSI’s stock price of $19.29 implies a valuation ratio of 15.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.