Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
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 are two small-cap stocks that could be the next 100 baggers and one that could be down big.
One Small-Cap Stock to Sell:
Pangaea (PANL)
Market Cap: $547.4 million
Established in 1996, Pangaea Logistics (NASDAQ:PANL) specializes in global logistics and transportation services, focusing on the shipment of dry bulk cargoes.
Why Do We Think Twice About PANL?
- Gross margin of 19.8% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Efficiency has decreased over the last five years as its operating margin fell by 4.9 percentage points
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
Pangaea is trading at $8.38 per share, or 9.1x forward P/E. If you’re considering PANL for your portfolio, see our FREE research report to learn more.
Two Small-Cap Stocks to Watch:
WD-40 (WDFC)
Market Cap: $2.90 billion
Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ:WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.
Why Is WDFC on Our Radar?
- Differentiated product offerings are difficult to replicate at scale and lead to a top-tier gross margin of 55.4%
- Strong free cash flow margin of 12.5% enables it to reinvest or return capital consistently
- Industry-leading 26.3% return on capital demonstrates management’s skill in finding high-return investments, and its returns are climbing as it finds even more attractive growth opportunities
WD-40’s stock price of $215.76 implies a valuation ratio of 36.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Primerica (PRI)
Market Cap: $9.23 billion
With a sales force of over 140,000 licensed representatives operating on an independent contractor model, Primerica (NYSE:PRI) provides term life insurance, investment products, and other financial services to middle-income households in the United States and Canada.
Why Should PRI Be on Your Watchlist?
- Pre-tax profit margin improvement of 6.5 percentage points over the last five years demonstrates its ability to scale efficiently
- Share buybacks propelled its annual earnings per share growth to 17.9%, which outperformed its revenue gains over the last five years
- Industry-leading 28.5% return on equity demonstrates management’s skill in finding high-return investments
At $291.91 per share, Primerica trades at 3.4x forward P/B. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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.