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 that could be down big.
Two Small-Cap Stocks to Sell:
Designer Brands (DBI)
Market Cap: $332.1 million
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE:DBI) is an American discount retailer focused on footwear and accessories.
Why Are We Out on DBI?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Earnings per share have contracted by 78.2% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
- 11× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Designer Brands’s stock price of $6.75 implies a valuation ratio of 19.3x forward P/E. Read our free research report to see why you should think twice about including DBI in your portfolio.
Myriad Genetics (MYGN)
Market Cap: $509.9 million
Founded in 1991 as one of the pioneers in translating genetic discoveries into clinical applications, Myriad Genetics (NASDAQ:MYGN) develops genetic tests that assess disease risk, guide treatment decisions, and provide insights across oncology, women's health, and mental health.
Why Do We Steer Clear of MYGN?
- Annual revenue growth of 6% over the last two years was below our standards for the healthcare sector
- Negative returns on capital show management lost money while trying to expand the business, and its decreasing returns suggest its historical profit centers are aging
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Myriad Genetics is trading at $5.50 per share, or 192.1x forward P/E. If you’re considering MYGN for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Watch:
BGC (BGC)
Market Cap: $4.33 billion
Tracing its roots back to 1945 and named after founder Bernard Gerald Cantor, BGC Group (NASDAQ:BGC) operates a global brokerage and financial technology platform that facilitates trading across fixed income, foreign exchange, equities, energy, and commodities markets.
Why Are We Positive On BGC?
- Annual revenue growth of 18.7% over the past two years was outstanding, reflecting market share gains this cycle
- Performance over the past two years shows its incremental sales were more profitable, as its annual earnings per share growth of 20.9% outpaced its revenue gains
- ROE of 11.2% shows management can invest its resources competently
At $9.24 per share, BGC trades at 7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.