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. Keeping that in mind, here is one small-cap stock that could be the next big thing and two that could be down big.
Two Small-Cap Stocks to Sell:
Griffon (GFF)
Market Cap: $4.8 billion
Initially in the defense industry, Griffon (NYSE: GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Why Does GFF Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.4% annually over the last five years
- Projected sales decline of 6.7% over the next 12 months indicates demand will continue deteriorating
- Earnings per share lagged its peers over the last two years as they only grew by 7% annually
Griffon’s stock price of $105.95 implies a valuation ratio of 17.7x forward P/E. Read our free research report to see why you should think twice about including GFF in your portfolio.
Ladder Capital (LADR)
Market Cap: $1.27 billion
Founded during the 2008 financial crisis when traditional lenders retreated from commercial real estate, Ladder Capital (NYSE: LADR) is a real estate investment trust that originates commercial real estate loans, owns commercial properties, and invests in real estate securities.
Why Does LADR Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 8.8% annually over the last two years
- Sales were less profitable over the last two years as its earnings per share fell by 16.8% annually, worse than its revenue declines
- Products and services are facing profitability challenges during this cycle, as seen in its flat tangible book value per share over the last five years
At $10.02 per share, Ladder Capital trades at 0.9x forward P/B. To fully understand why you should be careful with LADR, check out our full research report (it’s free).
One Small-Cap Stock to Buy:
FuelCell Energy (FCEL)
Market Cap: $1.63 billion
Founded in 1969, FuelCell Energy (NASDAQ: FCEL) is a leading manufacturer and developer of carbonate fuel cell technology for stationary power generation.
Why Will FCEL Outperform?
- Annual revenue growth of 38.8% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings per share have massively outperformed its peers over the last two years, increasing by 40.6% annually
- Cash-burning tendencies have improved over the last five years, showing it could become financially independent one day
FuelCell Energy is trading at $20.38 per share, or 5.8x forward price-to-sales. Is now the time to initiate a position? 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
