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.

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 100 baggers and one that could be down big.

One Small-Cap Stock to Sell:

Hanesbrands (HBI)

Market Cap: $2.27 billion

A classic American staple founded in 1901, Hanesbrands (NYSE: HBI) is a clothing company known for its array of basic apparel including innerwear and activewear.

Why Should You Dump HBI?

1. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
2. Sales are projected to be flat over the next 12 months and imply weak demand
3. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable

At $6.40 per share, Hanesbrands trades at 12x forward P/E. If you’re considering HBI for your portfolio, see our FREE research report to learn more.

Two Small-Cap Stocks to Watch:

Abercrombie and Fitch (ANF)

Market Cap: $4.47 billion

Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.

Why Do We Like ANF?

1. Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 14.8% over the past two years
2. Unique assortment of products and pricing power are reflected in its best-in-class gross margin of 63.6%
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Abercrombie and Fitch’s stock price of $94.19 implies a valuation ratio of 9.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Construction Partners (ROAD)

Market Cap: $6.03 billion

Founded in 2001, Construction Partners (NASDAQ: ROAD) is a civil infrastructure company that builds and maintains roads, highways, and other infrastructure projects.

Why Is ROAD a Good Business?

1. Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 9.6% over the past two years
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 70.6% outpaced its revenue gains
3. Free cash flow margin grew by 5.1 percentage points over the last five years, giving the company more chips to play with

Construction Partners is trading at $105.38 per share, or 39.8x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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