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.
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. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two that may have trouble.
Two Small-Cap Stocks to Sell:
Brookdale (BKD)
Market Cap: $3.72 billion
With a network of over 650 communities serving approximately 59,000 residents across 41 states, Brookdale Senior Living (NYSE: BKD) operates senior living communities across the United States, offering independent living, assisted living, memory care, and continuing care retirement communities.
Why Does BKD Worry Us?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.6% annually over the last five years
- Estimated sales decline of 4.8% for the next 12 months implies a challenging demand environment
- High net-debt-to-EBITDA ratio of 12× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Brookdale’s stock price of $15.85 implies a valuation ratio of 17.8x forward EV-to-EBITDA. If you’re considering BKD for your portfolio, see our FREE research report to learn more.
Hilltop Holdings (HTH)
Market Cap: $2.26 billion
Transformed from a residential communities business to a financial services powerhouse in 2007, Hilltop Holdings (NYSE: HTH) is a Texas-based financial holding company that provides banking, broker-dealer, and mortgage origination services.
Why Do We Avoid HTH?
- Flat net interest income over the last five years suggest it must find different ways to grow during this cycle
- Efficiency ratio is expected to worsen by 32.1 percentage points over the next year
- Sales were less profitable over the last five years as its earnings per share fell by 15% annually, worse than its revenue declines
At $37.30 per share, Hilltop Holdings trades at 1x forward P/B. Dive into our free research report to see why there are better opportunities than HTH.
One Small-Cap Stock to Watch:
Cal-Maine (CALM)
Market Cap: $4.00 billion
Known for brands such as Egg-Land’s Best and Land O’ Lakes, Cal-Maine (NASDAQ: CALM) produces, packages, and distributes eggs.
Why Is CALM on Our Radar?
- Remarkable 18.5% revenue growth over the last three years demonstrates its ability to capture significant market share
- Share repurchases over the last three years enabled its annual earnings per share growth of 34.7% to outpace its revenue gains
- CALM is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
Cal-Maine is trading at $83.99 per share, or 26.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our 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 244% over the last five years (as of June 30, 2025).
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
