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:
Monarch (MCRI)
Market Cap: $2.19 billion
Established in 1993, Monarch (NASDAQ: MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Why Do We Pass on MCRI?
- Sales trends were unexciting over the last five years as its 14.1% annual growth was below the typical consumer discretionary company
- Free cash flow margin is on track to jump by 1.5 percentage points next year, meaning the company will have more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Improving returns on capital suggest management is identifying more profitable investments
Monarch is trading at $121.97 per share, or 18.7x forward P/E. If you’re considering MCRI for your portfolio, see our FREE research report to learn more.
Neogen (NEOG)
Market Cap: $2.51 billion
Founded in 1981 and operating at the intersection of food safety and animal health, Neogen (NASDAQ: NEOG) develops and manufactures diagnostic tests and related products to detect dangerous substances in food and pharmaceuticals for animal health.
Why Are We Out on NEOG?
- Annual sales declines of 3% for the past two years show its products and services struggled to connect with the market during this cycle
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $11.40 per share, Neogen trades at 32.4x forward P/E. Dive into our free research report to see why there are better opportunities than NEOG.
One Small-Cap Stock to Watch:
Belden (BDC)
Market Cap: $4.56 billion
With its enamel-coated copper wire used in WWI for the Allied forces, Belden (NYSE: BDC) designs, manufactures, and sells electronic components to various industries.
Why Are We Positive on BDC?
- Annual revenue growth of 11.2% over the past two years was outstanding, reflecting market share gains this cycle
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 34.4%
- Offerings are difficult to replicate at scale and result in a premier gross margin of 44.1%
Belden’s stock price of $118.09 implies a valuation ratio of 11x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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.
