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.
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. That said, here is one small-cap stock that could be the next big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
Vishay Precision (VPG)
Market Cap: $586.9 million
Emerging from Vishay Intertechnology in 2010, Vishay Precision (NYSE:VPG) operates as a global provider of precision measurement and sensing technologies.
Why Do We Think VPG Will Underperform?
- Sales tumbled by 7% annually over the last two years, showing market trends are working against its favor during this cycle
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 16.2% annually
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Vishay Precision is trading at $44.28 per share, or 55.9x forward P/E. If you’re considering VPG for your portfolio, see our FREE research report to learn more.
Forestar Group (FOR)
Market Cap: $1.54 billion
As a majority-owned subsidiary of homebuilding giant D.R. Horton, Forestar Group (NYSE:FOR) develops and sells finished residential lots to homebuilders, focusing primarily on land acquisition and development for single-family homes.
Why Are We Out on FOR?
- Average unit sales growth of -26.8% over the past two years reflects steady demand for its products
- Negative free cash flow raises questions about the return timeline for its investments
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
Forestar Group’s stock price of $30.31 implies a valuation ratio of 9.9x forward P/E. Read our free research report to see why you should think twice about including FOR in your portfolio.
One Small-Cap Stock to Watch:
Cadre (CDRE)
Market Cap: $1.74 billion
Originally known as Safariland, Cadre (NYSE:CDRE) specializes in manufacturing and distributing safety and survivability equipment for first responders.
Why Are We Positive On CDRE?
- Impressive 13.4% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Market share is on track to rise over the next 12 months as its 16.1% projected revenue growth implies demand will accelerate from its two-year trend
- Earnings per share grew by 19.9% annually over the last two years and trumped its peers
At $42.19 per share, Cadre trades at 28.5x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.