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.
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 are two small-cap stocks that could be the next 100 baggers and one that may have trouble.
One Small-Cap Stock to Sell:
Central Garden & Pet (CENT)
Market Cap: $2.25 billion
Enhancing the lives of both pets and homeowners, Central Garden & Pet (NASDAQ: CENT) is a leading producer and distributor of essential products for pet care, lawn and garden maintenance, and pest control.
Why Do We Avoid CENT?
- Sales tumbled by 1.9% annually over the last three years, showing consumer trends are working against it
- Sales are projected to tank by 5.1% over the next 12 months as its demand continues evaporating
- Low returns on capital reflect management’s struggle to allocate funds effectively
Central Garden & Pet is trading at $40.60 per share, or 14x forward P/E. If you’re considering CENT for your portfolio, see our FREE research report to learn more.
Two Small-Cap Stocks to Buy:
Northwest Pipe (NWPX)
Market Cap: $970.8 million
Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ: NWPX) is a manufacturer of pipeline systems for water infrastructure.
Why Is NWPX a Top Pick?
- Impressive 14.4% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin increased by 18.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Northwest Pipe’s stock price of $100.73 implies a valuation ratio of 20.1x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Riley Exploration Permian (REPX)
Market Cap: $988.9 million
Operating in counties where legacy oil fields have been producing since the early 1900s, Riley Exploration Permian (NYSE: REPX) drills for and produces oil and natural gas from horizontal wells in the Permian Basin of West Texas and New Mexico.
What Makes REPX Stand Out?
- Impressive 30.8% annual revenue growth over the last eight years indicates it’s winning market share this cycle
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 76.4%
- Robust free cash flow margin of 16.1% gives it many options for capital deployment
At $44.32 per share, Riley Exploration Permian trades at 5.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
