Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
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. 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:
Stitch Fix (SFIX)
Market Cap: $583.3 million
One of the original subscription box companies, Stitch Fix (NASDAQ:SFIX) is an online personal styling and fashion service that curates personalized clothing selections for customers.
Why Do We Think SFIX Will Underperform?
- Number of active clients has disappointed over the past two years, indicating weak demand for its offerings
- Persistent operating margin losses suggest the business manages its expenses poorly
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $4.47 per share, Stitch Fix trades at 12.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SFIX doesn’t pass our bar.
TreeHouse Foods (THS)
Market Cap: $940.8 million
Whether it be packaged crackers, broths, or beverages, Treehouse Foods (NYSE:THS) produces a wide range of private-label foods for grocery and food service customers.
Why Are We Out on THS?
- Falling unit sales over the past two years suggest it might have to lower prices to stimulate growth
- Commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 16.5%
- Underwhelming 1.5% return on capital reflects management’s difficulties in finding profitable growth opportunities
TreeHouse Foods is trading at $18.63 per share, or 9.4x forward P/E. To fully understand why you should be careful with THS, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
BancFirst (BANF)
Market Cap: $4.03 billion
Operating as a "super community bank" with a decentralized management approach that emphasizes local responsiveness, BancFirst Corporation (NASDAQ:BANF) operates as a financial holding company providing commercial banking services to retail customers and small to medium-sized businesses primarily in Oklahoma and Texas.
Why Should BANF Be on Your Watchlist?
- Annual revenue growth of 8.7% over the last five years beat the sector average and underscores the unique value of its offerings
- Additional sales over the last five years increased its profitability as the 15% annual growth in its earnings per share outpaced its revenue
- Impressive 11% annual tangible book value per share growth over the last five years indicates it’s building equity value this cycle
BancFirst’s stock price of $121.68 implies a valuation ratio of 2.2x forward P/B. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 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-micro-cap company Kadant (+351% 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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