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.
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 is one small-cap stock that could be the next 100 bagger and two that could be down big.
Two Small-Cap Stocks to Sell:
Ziff Davis (ZD)
Market Cap: $2.00 billion
Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ:ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.
Why Do We Pass on ZD?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 9.2 percentage points
- Earnings per share fell by 7% annually over the last five years while its revenue was flat, showing each sale was less profitable
At $54.29 per share, Ziff Davis trades at 10.2x forward P/E. Read our free research report to see why you should think twice about including ZD in your portfolio.
Flagstar Financial (FLG)
Market Cap: $5.87 billion
Tracing its roots back to 1859 and rebranded from New York Community Bancorp in 2024, Flagstar Financial (NYSE:FLG) is a bank holding company that offers commercial and consumer banking services, with specialties in multi-family lending, mortgage originations, and warehouse lending.
Why Do We Think FLG Will Underperform?
- Net interest income trends were unexciting over the last five years as its 7.5% annual growth was below the typical banking firm
- Inferior net interest margin of 2% means it must compensate for lower profitability through increased loan originations
- Earnings per share fell by 52.6% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
Flagstar Financial’s stock price of $14.47 implies a valuation ratio of 0.8x forward P/B. Dive into our free research report to see why there are better opportunities than FLG.
One Small-Cap Stock to Watch:
Gevo (GEVO)
Market Cap: $344.4 million
Operating one of the largest dairy-based renewable natural gas facilities in the United States, Gevo (NASDAQ:GEVO) produces sustainable aviation fuel and other renewable hydrocarbon fuels from plant-based feedstocks like corn.
Why Do We Like GEVO?
- Annual revenue growth of 19% over the last ten years was superb and indicates its market share increased during this cycle
- EBITDA profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
Gevo is trading at $1.43 per share, or 9x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.