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.
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. That said, here is one small-cap stock that could be the next big thing and two best left ignored.
Two Small-Cap Stocks to Sell:
Boston Beer (SAM)
Market Cap: $2.49 billion
Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE: SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.
Why Does SAM Worry Us?
- Sales tumbled by 2% annually over the last three years, showing consumer trends are working against its favor
- Modest revenue base of $1.96 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Projected sales for the next 12 months are flat and suggest demand will be subdued
At $252 per share, Boston Beer trades at 25.3x forward P/E. Read our free research report to see why you should think twice about including SAM in your portfolio.
Golden Entertainment (GDEN)
Market Cap: $740.8 million
Founded in 2001, Golden Entertainment (NASDAQ: GDEN) is a gaming company operating casinos, taverns, and distributed gaming platforms.
Why Should You Sell GDEN?
- Annual revenue declines of 1.8% over the last five years indicate problems with its market positioning
- Low free cash flow margin of 6% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Golden Entertainment is trading at $28.05 per share, or 32.8x forward P/E. If you’re considering GDEN for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Buy:
Armstrong World (AWI)
Market Cap: $7.57 billion
Started as a two-man shop dating back to the 1860s, Armstrong (NYSE: AWI) provides ceiling and wall products to commercial and residential spaces.
Why Will AWI Beat the Market?
- Market share has increased this cycle as its 11.9% annual revenue growth over the last two years was exceptional
- Share repurchases over the last two years enabled its annual earnings per share growth of 18% to outpace its revenue gains
- Free cash flow margin jumped by 5.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Armstrong World’s stock price of $176.83 implies a valuation ratio of 21.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive 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 meeting 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 (+1,326% 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.
