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. 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:
GoodRx (GDRX)
Market Cap: $757.1 million
Started in 2011 to tackle the problem of high prescription drug costs in America, GoodRx (NASDAQ: GDRX) operates a digital platform that helps consumers find lower prices on prescription medications through price comparison tools and discount codes.
Why Do We Steer Clear of GDRX?
- Weak customer trends over the past two years suggest it may need to improve its products, pricing, or go-to-market strategy
- Modest revenue base of $796.9 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Push for growth has led to negative returns on capital, signaling value destruction
At $2.22 per share, GoodRx trades at 6.9x forward P/E. Dive into our free research report to see why there are better opportunities than GDRX.
Two Small-Cap Stocks to Watch:
Montrose (MEG)
Market Cap: $930.8 million
Founded to protect a tree-lined two-lane road, Montrose (NYSE: MEG) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.
Why Are We Backing MEG?
- Impressive 15.3% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 66.3% over the last two years outstripped its revenue performance
- Free cash flow margin expanded by 5.4 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Montrose is trading at $25.87 per share, or 19.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
ServisFirst Bancshares (SFBS)
Market Cap: $3.93 billion
Founded in 2005 with a focus on serving underserved mid-sized businesses, ServisFirst Bancshares (NYSE: SFBS) is a bank holding company that provides commercial banking services to businesses and professionals through its subsidiary ServisFirst Bank.
Why Do We Like SFBS?
- Market share has increased this cycle as its 14.2% annual revenue growth over the last two years was exceptional
- Exciting net interest income outlook for the upcoming 12 months calls for 19.2% growth, an acceleration from its five-year trend
- Annual tangible book value per share growth of 13.1% over the last five years was superb and indicates its capital strength increased during this cycle
ServisFirst Bancshares’s stock price of $71.84 implies a valuation ratio of 1.9x forward P/B. 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
