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. That said, here is one small-cap stock that could be the next 100 bagger and two best left ignored.
Two Small-Cap Stocks to Sell:
Dropbox (DBX)
Market Cap: $6.40 billion
Originally named after the founders' tendency to "drop" files into a shared folder, Dropbox (NASDAQ: DBX) provides a content collaboration platform that helps individuals and teams store, organize, share, and work on files from anywhere.
Why Do We Steer Clear of DBX?
- Flat billings over the last year suggest it may need to improve its products, pricing, or go-to-market strategy to reinvigorate demand
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Operating margin expansion of 6.1 percentage points over the last year shows the company optimized its expenses
Dropbox’s stock price of $22.56 implies a valuation ratio of 2.6x forward price-to-sales. Check out our free in-depth research report to learn more about why DBX doesn’t pass our bar.
Goodyear (GT)
Market Cap: $1.69 billion
With its iconic blimp floating above major sporting events since 1925, Goodyear (NASDAQ: GT) is one of the world's largest tire manufacturers, producing and selling tires for automobiles, trucks, aircraft, and other vehicles, along with related services.
Why Should You Sell GT?
- Sales tumbled by 4.9% annually over the last two years, showing market trends are working against its favor during this cycle
- Issuance of new shares over the last two years caused its earnings per share to fall by 56.8% annually, even worse than its revenue declines
- Negative free cash flow raises questions about the return timeline for its investments
Goodyear is trading at $5.90 per share, or 0.1x forward price-to-sales. To fully understand why you should be careful with GT, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
Astec (ASTE)
Market Cap: $1.12 billion
Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.
Why Could ASTE Be a Winner?
- Estimated revenue growth of 12.9% for the next 12 months implies demand will accelerate from its two-year trend
- Operating margin improvement of 4.6 percentage points over the last five years demonstrates its ability to scale efficiently
- Additional sales over the last two years increased its profitability as the 18.5% annual growth in its earnings per share outpaced its revenue
At $48.58 per share, Astec trades at 12.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
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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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
